What changed in this filing

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Item 1. Business

2026-03-12 compared with 2025-03-26 · 794 added, 765 removed, 462 unchanged (77% of the section changed)

All Share amounts and per Share amounts referenced in Item 1 have

been adjusted to reflect the 4 for 1 share split that occurred on February 14, 2025.

The VanEck Bitcoin ETF (the “Trust”) was formed as a

Delaware statutory trust on December 17, 2020.

The Trust operates pursuant to the Third Amended and Restated Trust Agreement dated

as of March 1, 2024 (the “Trust Agreement”).

The purpose of the Trust is to own bitcoin transferred to the Trust in

exchange for shares issued by the Trust (the “Shares”).

Each Share represents a fractional undivided beneficial interest

in and ownership of the Trust.

The assets of the Trust consist primarily of bitcoin held by a third-party custodian.

The Trust is managed and controlled by the sponsor VanEck Digital

Assets, LLC (the “Sponsor”), a Delaware limited liability company.

The Sponsor is a wholly-owned subsidiary of Van

Eck Associates Corporation (“VanEck”).

CSC Delaware Trust Company, a Delaware trust company, is the Delaware trustee

of the Trust (the “Trustee”).

Gemini Trust Company, LLC (the “Bitcoin Custodian”) and

Coinbase Custody Trust Company, LLC (the “Additional Bitcoin Custodian”, and together with the Bitcoin Custodian, the

“Bitcoin Custodians”) are the custodians of the Trust, who hold all of the Trust’s bitcoin on the Trust’s

State Street Bank and Trust Company (“State Street”) serves as the Trust’s administrator (the “Administrator”),

All Share amounts and per Share amounts referenced in Item

1 have been adjusted to reflect the 4 for 1 share split that occurred on February 14, 2025.

The VanEck Bitcoin ETF (the “Trust”) was formed

as a Delaware statutory trust on December 17, 2020.

The Trust operates pursuant to the Third Amended and Restated Declaration of

Trust and Trust Agreement dated as of March 1, 2024, as amended by Amendment No.

1 thereof (the “Trust Agreement”).

The purpose of the Trust is to own bitcoin transferred to the Trust in exchange for shares issued by the Trust (the “Shares”).

Each Share represents a fractional undivided beneficial interest in and ownership of the Trust.

The assets of the Trust consist

primarily of bitcoin held by a third-party custodian.

The Trust is managed and controlled by the sponsor, VanEck

Digital Assets, LLC (the “Sponsor”), a Delaware limited liability company.

The Sponsor is a wholly-owned subsidiary

of Van Eck Associates Corporation (“VanEck”).

CSC Delaware Trust Company, a Delaware trust company, is the Delaware

trustee of the Trust (the “Trustee”).

Gemini Trust Company, LLC (the “Bitcoin Custodian”) and Coinbase

Custody Trust Company, LLC (the “Additional Bitcoin Custodian”, and together with the Bitcoin Custodian, the “Bitcoin

Custodians”) are the custodians of the Trust, who hold all of the Trust’s bitcoin on the Trust’s behalf.

Street Bank and Trust Company (“State Street”) serves as the Trust’s administrator (the “Administrator”),

the transfer agent for the Trust (the “Transfer Agent”) and the cash custodian of the Trust (the “Cash Custodian”).

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Outstanding Shares of the Trust were 55,900,000 at December

The Trust is not actively managed and will not take any actions to

take advantage, or mitigate the impacts, of volatility in the price of bitcoin.

The activities of the Trust include (i) selling Shares in blocks

of 25,000 Shares (“Baskets”) to financial firms that are registered broker-dealers (“Authorized Participants”

The Trust is not actively managed and will not take any actions

to take advantage, or mitigate the impacts, of volatility in the price of bitcoin.

The activities of the Trust include (i) selling Shares in

blocks of 25,000 Shares (“Baskets”) to financial firms that are registered broker-dealers (“Authorized Participants”

or “APs”) in exchange for cash to purchase bitcoin;

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to Authorized Participants redeeming Shares or to pay the Sponsor’s Fee and Trust expenses not assumed by the Sponsor, if

The Trust sells or redeems its Shares in Baskets that are

based on the amount of bitcoin represented by the Basket being created, the amount of bitcoin being equal to the combined NAV of

the number of Shares included in the Basket (net of the accrued but unpaid remuneration due the Sponsor (“Sponsor Fee”)

and any accrued but unpaid expenses or liabilities not assumed by the Sponsor).

The Trust currently conducts subscriptions and

redemptions solely in cash.

Authorized Participants deliver cash to create Baskets and will receive only cash when redeeming Shares.

The Sponsor of the Trust maintains a website at https://www.vaneck.com/us/en/investments/bitcoin-trust-hodl/,

through which the Trust’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”), are made

available free of charge after they have been filed or

furnished to the Securities and Exchange Commission (the “SEC”).

The information on the Trust’s website is not,

and shall not be deemed to be, part of this report or incorporated into any other filings we make with the SEC.

Additional information

regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov.

The Trust sells or redeems its Shares in Baskets

that are based on the amount of bitcoin represented by the Basket being created, the amount of bitcoin being equal to the combined

NAV of the number of Shares included in the Basket (net of the accrued but unpaid remuneration due the Sponsor (“Sponsor

Fee”) and any accrued but unpaid expenses or liabilities not assumed by the Sponsor).

The Trust conducts subscriptions and

redemptions in cash or in-kind.

For a subscription in cash, the Authorized

Participant’s subscription for Shares shall be in the amount of cash needed to purchase the amount of bitcoin

represented by the Basket being created, as calculated by the Administrator based on the MarketVector TM Bitcoin

Benchmark Rate (the “Index”) or the other valuation policies described in the prospectus.

The AP will deliver the

cash to the Trust’s account at the Cash Custodian, which the Sponsor will then use to purchase bitcoin from a third

party selected by the Sponsor to purchase bitcoin from (such third party, a “Liquidity Provider”).

redemption in cash, the Sponsor shall arrange for the bitcoin represented by the Creation Basket to be sold to a Liquidity

Provider selected by the Sponsor and the cash proceeds to be distributed from the Trust’s account at the Cash Custodian

to the Authorized Participant in exchange for their Shares.

For an “in-kind” subscription, Authorized

Participants will deliver, or arrange for the delivery by the Authorized Participant’s designee of, bitcoin to the

Trust’s custody account with the Bitcoin Custodian in exchange for Shares when they purchase Shares.

redemption transaction with the Trust, when Authorized Participants redeem Shares, the Trust through the

Bitcoin Custodian, will deliver bitcoin to such Authorized Participants, or a designee thereof, in exchange for their Shares.

Sponsor of the Trust maintains a website at https://www.vaneck.com/us/en/investments/bitcoin-trust-hodl/, through which the Trust’s

annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed

or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),

are made available free of charge after they have been filed or furnished to the Securities and Exchange Commission (the “SEC”).

The information

on the Trust’s website is not, and shall not be deemed to be, part of this report or incorporated into any other filings

we make with the SEC.

Additional information regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov.

Trust Objective

The Trust’s investment objective is to reflect the

performance of the price of bitcoin less the expenses of the Trust’s operations.

The Trust provides investors with the opportunity

to access the market for bitcoin through Shares held in a traditional brokerage account without the potential barriers to entry

or risks involved with holding or transferring bitcoin directly, acquiring it from an exchange, or mining it.

The Sponsor believes

that the design of the Trust enables certain investors to more effectively and efficiently implement strategic and tactical asset

allocation strategies that use bitcoin by investing in the Shares rather than purchasing, holding and trading bitcoin directly

The Trust’s investment objective is to reflect

the performance of the price of bitcoin less the expenses of the Trust’s operations.

The Trust provides investors with the

opportunity to access the market for bitcoin through Shares held in a traditional brokerage account without the potential barriers

to entry or risks involved with holding or transferring bitcoin directly, acquiring it from an exchange, or mining it.

believes that the design of the Trust enables certain investors to more effectively and efficiently implement strategic and tactical

asset allocation strategies that use bitcoin by investing in the Shares rather than purchasing, holding and trading bitcoin directly

or through derivatives.

The Trust is a passive investment vehicle that does not

seek to pursue any investment strategy beyond tracking the price of bitcoin.

The Trust is a passive investment vehicle that does

not seek to pursue any investment strategy beyond tracking the price of bitcoin.

As a result, the Trust will not attempt to speculatively

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increases, nor will the Trust attempt to avoid losses or hedge exposure arising from the risk of changes in the price of bitcoin.

The Shares are listed for trading on the Cboe BZX Exchange, Inc.

The Shares are listed for trading on the Cboe BZX Exchange,

(the “Exchange”) under the ticker symbol “HODL.”

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participants.

Because peer-to-peer transfers of bitcoin are recorded on the “Bitcoin

Blockchain,” which is a digital public recordkeeping system or ledger, buying, holding and selling bitcoin is very different

than buying, holding and selling more conventional instruments like cash, stocks or bonds.

Miners authenticate and bundle bitcoin

transactions sequentially into files called “blocks,” which requires performing computational work to solve a cryptographic

puzzle set by the Bitcoin network’s software protocol.

Because each solved block contains a reference to the previous block,

they form a chronological “chain” back to the first bitcoin transaction.

Copies of the Bitcoin Blockchain are stored

in a decentralized manner on the computers of each individual Bitcoin network full node, i.e., any user who chooses to maintain

on their computer a full copy of the Bitcoin Blockchain as well as related software.

Each bitcoin is associated with a set of unique

cryptographic “keys,” in the form of a string of numbers and letters, which allow whoever is in possession of the private

key to assign that bitcoin in a transfer that the Bitcoin network will recognize.

Bitcoin must either be acquired through the process of “mining,”

obtained in a peer-to-peer transaction, or purchased through an online bitcoin trading platform or other intermediary, such as

a broker in the

institutional over-the-counter (“OTC”) market.

Because peer-to-peer transfers of bitcoin are recorded on

the “Bitcoin Blockchain,” which is a digital public recordkeeping system or ledger, buying, holding and selling bitcoin

is very different than buying, holding and selling more conventional instruments like cash, stocks or bonds.

Miners authenticate

and bundle bitcoin transactions sequentially into files called “blocks,” which requires performing computational work

to solve a cryptographic puzzle set by the Bitcoin network’s software protocol.

Because each solved block contains a reference

to the previous block, they form a chronological “chain” back to the first bitcoin transaction.

Copies of the Bitcoin

Blockchain are stored in a decentralized manner on the computers of each individual Bitcoin network full node, i.e., any user who

chooses to maintain on their computer a full copy of the Bitcoin Blockchain as well as related software.

Each bitcoin is associated

with a set of unique cryptographic “keys,” in the form of a string of numbers and letters, which allow whoever is in

possession of the private key to assign that bitcoin in a transfer that the Bitcoin network will recognize.

Bitcoin must either be acquired through the process of “mining,” obtained in a peer-to-peer transaction, or purchased through

an online bitcoin trading platform or other intermediary, such as a broker in the institutional over-the-counter (“OTC”) market.

transactions may be difficult to arrange, and involve complex and potentially risky procedures around safekeeping, transferring

and holding the bitcoin.

Alternatively, purchasing bitcoin on a bitcoin trading platform requires

choosing a trading platform, opening an account, and transferring funds to the trading platform in order to purchase the bitcoin.

Alternatively, purchasing bitcoin on a bitcoin trading platform

requires choosing a trading platform, opening an account, and transferring funds to the trading platform in order to purchase the

Transactions on exchanges are not ordinarily recorded on the Bitcoin Blockchain.

There are currently a large number of bitcoin

trading platforms from which to choose, the quality and reliability of which varies significantly.

The value of bitcoin within

the market is determined, in part, by the supply of and demand for bitcoin in the global bitcoin market, market expectations for

the adoption of bitcoin as a store of value, the number of merchants that accept bitcoin as a form of payment, and the volume of

peer-to-peer transactions, among other factors.

Outside of exchanges, Bitcoin can be traded OTC in transactions that

are not publicly reported.

The OTC market is largely institutional in nature, and OTC market participants generally consist of

institutional entities, such as firms that offer two-sided liquidity for bitcoin, investment managers, proprietary trading firms,

There are currently a large number of

bitcoin trading platforms from which to

choose, the quality and reliability of which varies significantly.

The value of bitcoin

within the market is determined, in part, by the supply of and demand for bitcoin in the global bitcoin market, market expectations

for the adoption of bitcoin as a store of value, the number of merchants that accept bitcoin as a form of payment, and the volume

of peer-to-peer transactions, among other factors.

Outside of exchanges, Bitcoin can be traded OTC in transactions

that are not publicly reported.

The OTC market is largely institutional in nature, and OTC market participants generally consist

of institutional entities, such as firms that offer two-sided liquidity for bitcoin, investment managers, proprietary trading firms,

high-net-worth individuals that trade bitcoin on a proprietary basis, entities with sizeable bitcoin holdings, and family offices.

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OTC transactions will agree upon a price and then one of the two parties will then initiate the transaction.

Although bitcoin was the first digital asset,

in the ensuing years, the number of digital assets, market participants and companies in the space has increased dramatically.

Although bitcoin was the first digital

asset, in the ensuing years, the number of digital assets, market participants and companies in the space has increased dramatically.

In addition to bitcoin, other well-known digital assets include Ethereum, Bitcoin Cash, and litecoin.

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Bitcoin Value

The value of bitcoin is determined by the value

that various market participants place on bitcoin through their transactions.

The most common means of determining the value of

a bitcoin is by surveying one or more bitcoin trading platforms where bitcoin is traded publicly and transparently.

bitcoin on the bitcoin market has exhibited periods of extreme volatility, which could have a negative impact on the performance

The value of bitcoin is determined by

the value that various market participants place on bitcoin through their transactions.

The most common means of determining the

value of a bitcoin is by surveying one or more bitcoin trading platforms where bitcoin is traded publicly and transparently.

price of bitcoin on the bitcoin market has exhibited periods of extreme volatility, which could have a negative impact on the performance

of the Trust.

For example, between November 2021 and November 2022, the price of bitcoin fell from an all-time high of $68,789

As of February 28, 2025, the price of bitcoin has increased to $84,147(source:

On exchanges, bitcoin is traded with publicly

disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S.

As of February 27, 2026, the price of bitcoin has decreased to $65,595.48 (source:

On exchanges, bitcoin is traded with

publicly disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S.

dollar or Euro.

or market makers do not typically disclose their trade data.

Currently, there are many exchanges operating

worldwide, representing a substantial percentage of bitcoin buying and selling activity, and providing the most data with respect

to prevailing valuations of bitcoins.

The below table reflects the average daily trading volume (in thousands of USD) of each of

the bitcoin trading platforms included in the MarketVector TM Bitcoin Benchmark Rate as of February 28, 2025 using data

reported by MarketVector from December 31, 2022 to February 28, 2025:

Bitcoin Exchanges included in the MarketVector TM Bitcoin Benchmark

as of February 28, 2025

Average Daily Volume

(in thousands of USD)

The market share for BTC/USD trading of the

five constituent trading platforms over the past four calendar quarters is shown in the table below:

The Trust and the Sponsor face competition with respect to the creation

of competing products, including with respect to the creation of competing exchange-traded bitcoin products.

There can be no assurance

that the Trust will grow to or maintain an economically viable size.

In addition, commercial banks and other financial institutions have

a number of initiatives that incorporate new technologies, including blockchain and similar technologies, into their payments and

settlement activities, which could compete with, or reduce the demand for, bitcoin.

OTC dealers or market makers do not typically disclose their trade data.

The Trust and the Sponsor face competition with respect to

the creation of competing products, including with respect to the creation of competing exchange-traded bitcoin products.

can be no assurance that the Trust will grow to or maintain an economically viable size.

In addition, commercial banks and other financial institutions

have a number of initiatives that incorporate new technologies, including blockchain and similar technologies, into their payments

and settlement activities, which could compete with, or reduce the demand for, bitcoin.

The Trust competes with direct investments

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The MarketVector TM Bitcoin Benchmark Rate

MarketVector is the index sponsor and index administrator for the

MarketVector is the index sponsor and index administrator

for the Index.

MarketVector is a wholly-owned subsidiary of VanEck.

CryptoCompare Data Limited is the calculation agent for the MarketVector TM

Bitcoin Benchmark Rate and an affiliate of VanEck.

The MarketVector TM Bitcoin Benchmark Rate is a U.S.

dollar-denominated

composite reference rate for the price of bitcoin.

The Index is calculated daily between 00:00 and 24:00 Central European Time

(“CET”) and the Index values are disseminated to data vendors.

CryptoCompare Data Limited is the calculation agent for the

MarketVector TM Bitcoin Benchmark Rate and an affiliate of VanEck.

The MarketVector TM Bitcoin Benchmark Rate is a

dollar-denominated composite reference rate for the price of bitcoin.

The Index is calculated daily between 00:00 and 24:00

Central European Time (“CET”) and the Index values are disseminated to data vendors.

The Index is disseminated in U.S.

dollars and the closing

and intraday value is calculated over twenty-three minute intervals pursuant to a methodology referred to as an equal-weighted

average of the volume-weighted median price.

dollars and the closing and intraday value is calculated over twenty-three minute intervals pursuant to a methodology referred

to as an equal-weighted average of the volume-weighted median price.

The MarketVector TM Bitcoin Benchmark Rate is designed

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providing a framework for assessing risk and in turn bringing transparency and accountability to a complex and rapidly evolving

The CCData Centralized Exchange Benchmark methodology utilizes a combination of qualitative and quantitative metrics to

The CCData Centralized

Exchange Benchmark methodology utilizes a combination of qualitative and quantitative metrics to

analyze a comprehensive data set across eight categories of evaluation:

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The current constituent trading platforms of the MarketVector TM

Bitcoin Benchmark Rate are Bitfinex, Bitstamp, Coinbase, LMAX, and Kraken.

Bitcoin Benchmark Rate are Coinbase, Crypto.com, Gemini, Kraken and OKX.

Net Asset Value Determinations

NAV means the total assets of the Trust which shall consist solely

of bitcoin and cash, less total liabilities of the Trust.

The Trust’s NAV is calculated based on the Trust’s net asset

holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in accordance

with the MarketVector TM Bitcoin Benchmark Rate price at 4:00 p.m.

NAV means the total assets of the Trust which shall consist

solely of bitcoin and cash, less total liabilities of the Trust.

The Trust’s NAV is calculated based on the Trust’s

net asset holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in

accordance with the MarketVector TM Bitcoin Benchmark Rate price at 4:00 p.m.

Eastern Time (“ET”).

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● dividing that total by the total number of outstanding Shares.

The Trust Agreement gives the Sponsor the exclusive authority to

determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

The Administrator calculates the NAV of the

Trust once each Exchange trading day.

The Trust Agreement gives the Sponsor

the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

The Administrator calculates the NAV

of the Trust once each Exchange trading day.

The NAV for a normal trading day will be released after 4:00 p.m.

Trading during the

core trading session on the Exchange typically closes at 4:00 p.m.

However, NAVs are not officially struck until later in the

day (often by 5:30 p.m.

Trading during

the core trading session on the Exchange typically closes at 4:00 p.m.

However, NAVs are not officially struck until later

in the day (often by 5:30 p.m.

ET and generally no later than 8:00 p.m.

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ET and 5:30 p.m.

ET (or later)

provides an opportunity to detect, flag, investigate, and correct unusual pricing should it occur.

The Sponsor will monitor for

significant events related to crypto assets that may impact the value of bitcoin and will determine in good faith, and in accordance

later) provides an opportunity to detect, flag, investigate, and correct unusual pricing should it occur.

The Sponsor will monitor

for significant events related to crypto assets that may impact the value of bitcoin and will determine in good faith, and in accordance

with its valuation policies and procedures, whether to fair value the Trust’s bitcoin on a given day (e.g., if the MarketVector TM

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inputs in certain situations (e.g., using observed market transactions, OTC quotations from brokers, etc.).

Accordingly, the NAV of the Trust may reflect

the fair value of bitcoin rather than the bitcoin market prices on certain exchanges at 4:00 p.m.

Fair value pricing involves

subjective judgments and it is possible that a fair value determination for bitcoin or other assets is materially different than

the value that could be realized upon the sale of such bitcoin or asset.

In addition, fair value pricing could result in a difference

between the prices used to calculate the Trust’s NAV and the prices used by the MarketVector TM Bitcoin Benchmark

Accordingly, the NAV of the Trust may

reflect the fair value of bitcoin rather than the bitcoin market prices on certain exchanges at 4:00 p.m.

Fair value pricing

involves subjective judgments and it is possible that a fair value determination for bitcoin or other assets is materially different

than the value that could be realized upon the sale of such bitcoin or asset.

In addition, fair value pricing could result in a

difference between the prices used to calculate the Trust’s NAV and the prices used by the MarketVector TM Bitcoin

Benchmark Rate.

Intraday Indicative Value

The Sponsor, in conjunction with the Administrator,

will work in good faith to determine the fair value and the correct calculation of the Trust’s NAV.

In addition, in order

to provide updated information relating to the Trust for use by Shareholders and market professionals, ICE Data Indices, LLC will

calculate and disseminate throughout the core trading session on each trading day an updated intraday indicative value (“IIV”).

The IIV is calculated by taking creation unit holdings and updating that value throughout the trading day to reflect changes in

the price of bitcoin;

this value is then divided by the numbers of Shares per creation unit in order to calculate an IIV on a “per

Share” basis.

The IIV disseminated during the Exchange core trading session hours

should not be viewed as an actual real time update of the NAV, because NAV per Share is calculated only once at the end of each

trading day based upon the relevant end of day values of the Trust’s investments.

The Trust will provide the IIV per Share

updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange’s regular

trading hours (9:30 a.m.

ICE Data Indices, LLC will disseminate the IIV value through the facilities of CTA/CQ

High Speed Lines.

In addition, the indicative fund value will be published on the Exchange’s website and will be available

through on-line information services such as Bloomberg and Reuters.

The IIV may differ from the NAV due to the differences in the

time window of trades used to calculate each price (the NAV uses a sixty-minute window, whereas the IIV draws prices from the last

trade on each exchange in an effort to produce a relevant, real-time price).

The Sponsor does not believe this will cause confusion

in the marketplace, as Authorized Participants are the only Shareholders who interact with the NAV and the Sponsor will communicate

its NAV calculation methodology clearly.

There are many instances in the market today

where the IIV and the NAV of an ETF are subtly different, whether due to the calculation methodology, market hours overlap or other

The Sponsor has seen limited or no negative impact on trading, liquidity or other factors for exchange-traded funds in

this situation.

The Sponsor, in conjunction with the

Administrator, will work in good faith to determine the fair value and the correct calculation of the Trust’s NAV.

in order to provide updated information relating to the Trust for use by Shareholders and market professionals, ICE Data Indices,

LLC will calculate and disseminate throughout the core trading session on each trading day an updated intraday indicative value

The IIV is calculated by taking creation unit holdings and updating that value throughout the trading day

to reflect changes in the price of bitcoin;

this value is then divided by the numbers of Shares per creation unit in order to calculate

an IIV on a “per Share” basis.

The IIV disseminated during the Exchange core trading session

hours should not be viewed as an actual real time update of the NAV, because NAV per Share is calculated only once at the end of

each trading day based upon the relevant end of day values of the Trust’s investments.

The Trust will provide the IIV per

Share updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange’s

regular trading hours (9:30 a.m.

ICE Data Indices, LLC will disseminate the IIV value through the facilities

of CTA/CQ High Speed Lines.

In addition, the indicative fund value will be published on the Exchange’s website and will be

available through on-line information services such as Bloomberg and Reuters.

The IIV may differ from the NAV due to the differences

in the time window of trades used to calculate each price (the NAV uses a sixty-minute window, whereas the IIV draws prices from

the last trade on each exchange in an effort to produce a relevant, real-time price).

The Sponsor does not believe this will cause

confusion in the marketplace, as Authorized Participants are the only Shareholders who interact with the NAV and the Sponsor will

communicate its NAV calculation methodology clearly.

There are many instances in the market

today where the IIV and the NAV of an ETF are subtly different, whether due to the calculation methodology, market hours overlap

or other factors.

The Sponsor has seen limited or no negative impact on trading, liquidity or other factors for exchange-traded

funds in this situation.

The Sponsor believes that the IIV tracks the globally integrated bitcoin price as reflected on the contributing

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trading at a discount compared to the IIV, a market professional

could buy the Trust’s Shares on the Exchange and sell short

futures contracts.

Such arbitrage trades can tighten the tracking between the market price of the Trust and the IIV and thus can

be beneficial to all market participants.

could buy the Trust’s Shares on

the Exchange and sell short futures contracts.

Such arbitrage trades can tighten the tracking between the market price of the Trust

and the IIV and thus can be beneficial to all market participants.

Secondary Market Trading

The Trust will create and redeem Shares from time to time, but only

in one or more Baskets.

The creation and redemption of Baskets are only made in exchange for delivery to the Trust or the distribution

by the Trust of the amount of bitcoin (or corresponding amount of cash) equal to the number of Shares included in the Baskets being

created or redeemed determined on the day the order to create or redeem Baskets is properly received.

The Trust will create and redeem Shares from time to time,

but only in one or more Baskets.

The creation and redemption of Baskets are only made in exchange for delivery to the Trust or

the distribution by the Trust of the amount of bitcoin (or corresponding amount of cash) equal to the number of Shares included

in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

As discussed above, Authorized Participants are the only persons

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is under no obligation to offer to the public Shares of any Baskets it does create.

Authorized Participants that do offer to the public Shares from the

Baskets they create will do so at per-Share offering prices that are expected to reflect, among other factors, the trading price

of the Shares on the Exchange, the NAV of the Trust at the time the Authorized Participant purchased the Baskets, the NAV of the

Shares at the time of the offer of the Shares to the public, the supply of and demand for Shares at the time of sale, and the liquidity

of bitcoin or other portfolio investments.

Baskets are generally redeemed when the price per Share is at a discount to the NAV

Shares initially comprising the same Basket but offered by Authorized Participants to the public at different times

may have different offering prices.

An order for one or more Baskets may be placed by an Authorized Participant on behalf of multiple

Authorized Participants who make deposits with the Trust in exchange for Baskets receive no fees, commissions or other

forms of compensation or inducement of any kind from either the Trust or the Sponsor and no such person has any obligation or responsibility

to the Sponsor or the Trust to effect any sale or resale of Shares.

Shares trade in the secondary market on the Exchange.

Shares are expected to trade in the secondary market on the Exchange.

Authorized Participants that do offer to the public Shares

from the Baskets they create will do so at per-Share offering prices that are expected to reflect, among other factors, the trading

price of the Shares on the Exchange, the NAV of the Trust at the time the Authorized Participant purchased the Baskets, the NAV

of the Shares at the time of the offer of the Shares to the public, the supply of and demand for Shares at the time of sale, and

the liquidity of bitcoin or other portfolio investments.

Baskets are generally redeemed when the price per Share is at a discount

to the NAV per Share.

Shares initially comprising the same Basket but offered by Authorized Participants to the public at different

times may have different offering prices.

An order for one or more Baskets may be placed by an Authorized Participant on behalf

of multiple clients.

Authorized Participants who make deposits with the Trust in exchange for Baskets receive no fees, commissions

or other forms of compensation or inducement of any kind from either the Trust or the Sponsor and no such person has any obligation

or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.

Shares trade in the secondary market on the

Shares are expected to trade in the secondary market on the

Shares may trade in the secondary market at prices that are lower or higher relative to their NAV per Share.

The amount of the

discount or premium in the trading price relative to the NAV per Share may be influenced by various factors, including the number

of Shareholders who seek to purchase or sell Shares in the secondary market and the liquidity of bitcoin.

The Sponsor arranged for the creation of the Trust and is responsible

for the ongoing registration of the Shares for their public offering in the United States and the listing of Shares on the Exchange.

The Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares of the Trust, and exercises

the marketing plan of the Trust on an ongoing basis.

The Sponsor appoints and may remove the Trust’s other service providers,

including the Trustee, Administrator, Transfer Agent, Bitcoin Custodian, Additional Bitcoin Custodian and Marketing Agent (as defined

below), as well as any additional, replacement, or successor service providers.

The Sponsor has agreed to pay all ordinary operating

expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor’s unified fee.

of the discount or premium in the trading price relative to the NAV per Share may be influenced by various factors, including the

number of Shareholders who seek to purchase or sell Shares in the secondary market and the liquidity of bitcoin.

The Sponsor arranged for the creation of the Trust and is

responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of Shares

on the Exchange.

The Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares of

the Trust, and exercises the marketing plan of the Trust on an ongoing basis.

The Sponsor appoints and may remove the Trust’s

other service providers, including the Trustee, Administrator, Transfer Agent, Bitcoin Custodian, Additional Bitcoin Custodian

and Marketing Agent (as defined below), as well as any additional, replacement, or successor service providers.

The Sponsor has

agreed to pay all ordinary operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor’s

The Cash Custodian

Under the cash custodian agreement (the “Cash Custody Agreement”),

State Street acts as custodian for the Trust’s cash.

The Cash Custodian is responsible for, among other things, maintaining

a separate deposit account or accounts for cash in the name of the Trust and determining the amount of bitcoin and/or cash required

for the issuance or redemption, as the case may be, of Shares in creation unit aggregations of the Trust after the end of each

Under the Cash Custody Agreement between State Street and the Trust,

State Street may act as custodian for the Trust’s non-bitcoin assets, if any, and as custodian for the Trust’s cash

(in such capacity, the “Cash Custodian”).

The Cash Custodian has agreed to, among other things, open and maintain a

separate deposit account or accounts of the Trust, to determine the amount of bitcoin and/or cash required for an issuance or redemption

of shares in a Basket and to release and deliver non-bitcoin assets and pay out cash.

The Cash Custodian shall credit to the deposit account(s) all cash

received by the Cash Custodian from or for the account of the Trust.

Upon an instruction to purchase Shares for the account of

the Trust, the Cash Custodian shall pay out cash

Under the cash custodian agreement (the “Cash Custody

Agreement”), State Street acts as custodian for the Trust’s cash.

The Cash Custodian is responsible for, among other

things, maintaining a separate deposit account or accounts for cash in the name of the Trust and determining the amount of bitcoin

and/or cash required for the issuance or redemption, as the case may be, of Shares in creation unit aggregations of the Trust after

the end of each trading day.

Under the Cash Custody Agreement between State Street and

the Trust, State Street may act as custodian for the Trust’s non-bitcoin assets, if any, and as custodian for the Trust’s

cash (in such capacity, the “Cash Custodian”).

The Cash Custodian has agreed to, among other things, open and maintain

a separate deposit account or accounts of the Trust, to determine the amount of bitcoin and/or cash required for an issuance or

redemption of shares in a Basket and to release and deliver non-bitcoin assets and pay out cash.

The Cash Custodian shall credit to the deposit account(s)

all cash received by the Cash Custodian from or for the account of the Trust.

Upon an instruction to purchase Shares for the account

of the Trust, the Cash Custodian shall pay out cash

of the Trust to purchase Shares.

Upon an instruction to redeem Shares for the

account of the Trust, the Cash Custodian shall transfer the Shares so as to sell or redeem the Shares and receive proceeds of such

sale or redemption.

Upon an instruction to redeem

Shares for the account of the Trust, the Cash Custodian shall transfer the Shares so as to sell or redeem the Shares and receive

proceeds of such sale or redemption.

The Bitcoin Custodian

Gemini Trust Company, LLC serves as the Trust’s Bitcoin Custodian

and is a fiduciary under § 100 of the New York Banking Law.

The Bitcoin Custodian is authorized to serve as the Trust’s

custodian under the Trust Agreement and pursuant to the terms and provisions of the agreement which establishes the rights and

responsibilities the Bitcoin Custodian, the Sponsor and the Trust with respect to the custody of the Trust’s bitcoin (the

“Custody Agreement”).

The Bitcoin Custodian has its principal office at 315 Park Ave South, Floor 16, New York, NY

The Bitcoin Custodian makes available to the Trust a custodial account

for bitcoin maintained by the Bitcoin Custodian (“Bitcoin Account”) and access to an omnibus custodial account held

at depository institutions or money market funds in the Bitcoin Custodian’s name for the benefit of its customers at which

a cash balance may be maintained (“Fiat Account”).

Gemini Trust Company, LLC serves as the Trust’s Bitcoin

Custodian and is a fiduciary under § 100 of the New York Banking Law.

The Bitcoin Custodian is authorized to serve as the

Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the agreement which establishes the

rights and responsibilities the Bitcoin Custodian, the Sponsor and the Trust with respect to the custody of the Trust’s bitcoin

(the “Custody Agreement”).

The Bitcoin Custodian has its principal office at 315 Park Ave South, Floor 16, New York,

The Bitcoin Custodian makes available to the Trust a custodial

account for bitcoin maintained by the Bitcoin Custodian (“Bitcoin Account”) and access to an omnibus custodial account

held at depository institutions or money market funds in the Bitcoin Custodian’s name for the benefit of its customers at

which a cash balance may be maintained (“Fiat Account”).

The Bitcoin Custodian’s services in respect of the Bitcoin

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for the benefit of the Bitcoin Custodian’s customers at depository institutions or money market funds.

The Sponsor may, in its sole discretion, add or terminate other bitcoin

The Sponsor has executed an agreement with Coinbase Custody Trust Company (“Coinbase Custody”) that allows

Coinbase Custody to serve as an additional custodian for the Trust’s assets.

The Sponsor may, in its sole discretion, change the

custodian for the Trust’s bitcoin holdings, but it will have no obligation to do so or to seek any particular terms for the

Trust from other such custodians.

To the extent that the Sponsor adds or terminates other bitcoin custodians, or changes the custodian

for the Trust’s bitcoin holdings, notification will be made to Shareholders via a prospectus supplement and/or a current

report filed with the SEC.

The Trust’s Bitcoin Custodian will keep custody of all of the

Trust’s bitcoin and will safeguard the private keys to the bitcoin associated with the Trust’s Bitcoin Account and

Clearing Account.

The Sponsor may, in its sole discretion,

add or terminate other bitcoin custodians.

The Sponsor has executed an agreement with Coinbase Custody Trust Company (“Coinbase

Custody”) that allows Coinbase Custody to serve as an additional custodian for the Trust’s assets.

The Sponsor may,

in its sole discretion, change the custodian for the Trust’s bitcoin holdings, but it will have no obligation to do so or

to seek any particular terms for the Trust from other such custodians.

To the extent that the Sponsor adds or terminates other

bitcoin custodians, or changes the custodian for the Trust’s bitcoin holdings, notification will be made to Shareholders

via a prospectus supplement and/or a current report filed with the SEC.

The Trust’s Bitcoin Custodian will keep custody of all

of the Trust’s bitcoin and will safeguard the private keys to the bitcoin associated with the Trust’s Bitcoin Account

and Clearing Account.

Bitcoin private keys are stored in two different forms:

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may be held in omnibus hot storage wallets.

The Bitcoin Custodian will use segregated cold storage bitcoin addresses

for the Trust’s Bitcoin Account, which is separate from the bitcoin addresses that the Bitcoin Custodian uses for its other

customers and which are directly verifiable via the bitcoin blockchain.

The Bitcoin Custodian will at all times record and identify

in its books and records that such bitcoins constitute the property of the Trust.

The Bitcoin Custodian will not loan, hypothecate,

pledge or otherwise encumber the Trust’s bitcoin, as applicable, without the Trust’s instruction, nor will the Sponsor

or any other entity or service provider.

The Trust will not lease or loan bitcoin held in the Trust’s account with the Bitcoin

Custodian and will not give instructions to that effect.

In addition to the bitcoin custodial services in connection with

the Bitcoin Account, the Bitcoin Custodian will also provide the Trust with clearing and settlement services for bitcoin purchase

The Bitcoin Custodian will use segregated cold storage bitcoin

addresses for the Trust’s Bitcoin Account, which is separate from the bitcoin addresses that the Bitcoin Custodian uses for

its other customers and which are directly verifiable via the bitcoin blockchain.

The Bitcoin Custodian will at all times record

and identify in its books and records that such bitcoins constitute the property of the Trust.

The Bitcoin Custodian will not loan,

hypothecate, pledge or otherwise encumber the Trust’s bitcoin, as applicable, without the Trust’s instruction, nor

will the Sponsor or any other entity or service provider.

The Trust will not lease or loan bitcoin held in the Trust’s account

with the Bitcoin Custodian and will not give instructions to that effect.

In addition to the bitcoin custodial services in connection

with the Bitcoin Account, the Bitcoin Custodian will also provide the Trust with clearing and settlement services for bitcoin purchase

and sale transactions (“Clearing Services”) between the Trust and a third party selected by the Sponsor who (1) is

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Custody Agreement.

The Additional Bitcoin Custodian has its principal address at 55 Hudson Yards, 550 West 34th Street, 4th Floor,

Additional Bitcoin Custodian has its principal address at 55 Hudson Yards, 550 West 34th Street, 4th Floor,

New York, NY 10001.

The Additional Bitcoin Custodian makes available to the Trust a custodial

account for bitcoin maintained by the Additional Bitcoin Custodian (the “Additional Bitcoin Account”).

The Additional

Bitcoin Custodian’s services in respect of the Additional Bitcoin Account (i) allow all or a portion of the Trust’s

bitcoin allocated to the vault balance (the “Additional Bitcoin Vault Balance”) to be held in the Additional Bitcoin

Account, (ii) allow bitcoin to be deposited from a public blockchain address to the Trust’s Additional Bitcoin Account, (iii)

allow bitcoin to be withdrawn from the Additional Bitcoin Account to a public blockchain address as instructed by the Trust and

(iv) certain additional services as may be agreed to between the Trust and the Additional Bitcoin Custodian from time to time.

The Trustee, a Delaware trust company, acts as the trustee of the

Trust for the purpose of creating a Delaware statutory trust in accordance with the Delaware Statutory Trust Act (“DSTA”).

The Additional Bitcoin Custodian makes available to the Trust

a custodial account for bitcoin maintained by the Additional Bitcoin Custodian (the “Additional Bitcoin Account”).

The Additional Bitcoin Custodian’s services in respect of the Additional Bitcoin Account (i) allow all or a portion of the

Trust’s bitcoin allocated to the vault balance (the “Additional Bitcoin Vault Balance”) to be held in the Additional

Bitcoin Account, (ii) allow bitcoin to be deposited from a public blockchain address to the Trust’s Additional Bitcoin Account,

(iii) allow bitcoin to be withdrawn from the Additional Bitcoin Account to a public blockchain address as instructed by the Trust

and (iv) certain additional services as may be agreed to between the Trust and the Additional Bitcoin Custodian from time to time.

The Trustee, a Delaware trust company, acts as the trustee

of the Trust for the purpose of creating a Delaware statutory trust in accordance with the Delaware Statutory Trust Act (“DSTA”).

The Trustee is appointed to serve as the trustee of the Trust in the State of Delaware for the sole purpose of satisfying the requirement

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General Duty of Care of Trustee

The Trustee is a fiduciary under the Trust Agreement;

provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee are limited by, and are only those

specifically set forth in, the Trust Agreement.

Resignation, Discharge or Removal of Trustee;

The Trustee is a fiduciary under the

Trust Agreement;

provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee are limited by,

and are only those specifically set forth in, the Trust Agreement.

Resignation, Discharge or Removal

Successor Trustees

The Trustee may resign upon at least 60 days’

prior written notice to the Sponsor;

provided, however, that such resignation shall not be effective until such time as a successor

Trustee has accepted such appointment.

The Sponsor may remove the Trustee at any time upon 60 days’ prior written notice

provided, however, that such removal shall not be effective

until such time as a successor Trustee has accepted such appointment.

Upon the resignation or removal of the Trustee, the Sponsor shall

appoint a successor Trustee.

Trustee may resign upon at least 60 days’ prior written notice to the Sponsor;

provided, however, that such resignation shall

not be effective until such time as a successor Trustee has accepted such appointment.

The Sponsor may remove the Trustee at any

time upon 60 days’ prior written notice to the Trustee;

provided, however, that such removal shall not be effective until such time as a successor Trustee has accepted such appointment.

Upon the resignation or removal of the Trustee, the Sponsor

shall appoint a successor Trustee.

If no successor Trustee shall have been appointed and shall have accepted such appointment within

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State Street serves as the Trust’s Administrator.

State Street’s

principal address is One Congress Street, Boston, MA 02111.

Under the Trust’s Administration Agreement between State Street

and the Trust (the “Trust Administration Agreement”) and a separate cash custodian agreement, the Administrator provides

certain administrative and accounting services and financial reporting for the maintenance and operations of the Trust, maintaining

the books of account of the Trust, including calculating the NAV of the Trust and disseminating the NAV and other information for

accounting data or any information pertaining to the books and records maintained by the Administrator.

Street’s principal address is One Congress Street, Boston, MA 02111.

Under the Trust’s Administration Agreement between

State Street and the Trust (the “Trust Administration Agreement”) and a separate cash custodian agreement, the Administrator

provides certain administrative and accounting services and financial reporting for the maintenance and operations of the Trust,

maintaining the books of account of the Trust, including calculating the NAV of the Trust and disseminating the NAV and other information

for accounting data or any information pertaining to the books and records maintained by the Administrator.

In addition, the Administrator

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State Street serves as the Transfer Agent for the Trust.

Transfer Agent:

(1) issues and redeems Shares of the Trust;

(2) responds to correspondence by Shareholders and others relating to its duties;

(2) responds to correspondence by Shareholders and others relating

to its duties;

(3) maintains Shareholder accounts;

and (4) makes periodic reports to the Trust.

The Trust’s Transfer Agent facilitates the

settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants.

The Trust’s Transfer Agent

facilitates the settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants.

The Marketing Agent

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The Trust’s Fees and Expenses

The Trust pays the Sponsor a unified fee (the “Sponsor

Fee”) of 0.20% of average daily net assets that accrues daily and pays monthly.

Prior to February 21, 2024, the Sponsor Fee

was 0.25% of average daily net assets.

Effective for the period from March 12, 2024, through November 30, 2024, the Sponsor agreed

to waive the entire Sponsor Fee for the first $1.5 billion of the Trust’s net assets.

Effective for the period from November

25, 2024 through January 10, 2026, the Sponsor will waive the entire Sponsor Fee for the first $2.5 billion of the Trust’s

If the Trust’s assets exceed $2.5 billion prior to January 10, 2026, the Sponsor Fee charged on assets over $2.5

billion will be 0.20% of average daily net assets.

All investors will incur the same Sponsor Fee which is the weighted average of

those fee rates.

After January 10, 2026, the Sponsor Fee will be 0.20% of average daily net assets.The Sponsor Fee is paid by the

Trust to the Sponsor as compensation for services performed under the Trust Agreement.

The Administrator makes its determination

regarding the Sponsor Fee in respect of each day by reference to the Trust’s NAV as of that day.

The Sponsor Fee accrues in

dollars and is payable monthly in arrears in bitcoin on, or by, the tenth business day of the next month in respect of the

Each month, the Administrator calculates the Sponsor Fee for each day of the month, resulting in a cumulative total in

dollars, which the Administrator then calculates the bitcoin equivalent of by reference to the Index as of the date of

calculation, and the Sponsor shall then withdraw the corresponding amount of bitcoin from the Trust’s Bitcoin Account in

payment of the Sponsor Fee.

Sponsor has agreed to pay all ordinary operating expenses (except for extraordinary expenses, including but not limited to, non-recurring

expenses and costs of services performed by the Sponsor or a service provider on behalf of the Trust to protect the Trust or the

interests of Shareholders, such as in connection with any indemnification of agents, service providers or counterparties of the

Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation,

regulatory enforcement or investigation matters) out of the Sponsor Fee.

Trust pays the Sponsor a unified fee (the “Sponsor Fee”) of 0.20% of average daily net assets that accrues daily and

pays monthly.

The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor Fee for stated

periods of time.

The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation

to waive any such fees during any period not covered by the waiver.

Effective for the period from November 25, 2025 through July

31, 2026, the Sponsor will waive the entire Sponsor Fee for the first $2.5 billion of the Trust’s assets.

If the Trust’s

assets exceed $2.5 billion prior to July 31, 2026, the Sponsor Fee charged on assets over $2.5 billion will be 0.20%.

All investors

will incur the same Sponsor Fee which is the weighted average of those fee rates.

After July 31, 2026, the Sponsor Fee will be

The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement.

Administrator makes its determination regarding the Sponsor Fee in respect of each day by reference to the Trust’s NAV as

The Sponsor Fee accrues in U.S.

dollars and is payable monthly in arrears in bitcoin on, or by, the tenth business

day of the next month in respect of the prior month.

Each month, the Administrator calculates the Sponsor Fee for each day of the

month, resulting in a cumulative total in U.S.

dollars, which the Administrator then calculates the bitcoin equivalent of by reference

to the Index as of the date of calculation, and the Sponsor shall then withdraw the corresponding amount of bitcoin from the Trust’s

Bitcoin Account in payment of the Sponsor Fee.

The Sponsor has agreed to pay all ordinary operating expenses (except for extraordinary expenses, including

but not limited to, non-recurring expenses and costs of services performed by the Sponsor or a service provider on behalf of the

Trust to protect the Trust or the interests of Shareholders, such as in connection with any indemnification of agents, service

providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred

in connection with litigation, regulatory enforcement or investigation matters) out of the Sponsor Fee.

For extraordinary expenses not covered in the previous sentence,

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Creation and Redemption of Shares

The Trust creates and redeems Shares from time to time, but only

in one or more Baskets.

Baskets are only made in exchange for delivery to the Trust of the amount of bitcoin represented by the

Baskets being created (subject to the Exchange receiving the necessary regulatory approval to permit the Trust to purchase and

redeem Shares in-kind for bitcoin (the “In-Kind Regulatory Approval”)), or an amount of cash sufficient purchase such

creates and redeems Shares from time to time, but only in one or more Baskets.

Baskets are only made in exchange for delivery

to the Trust of the amount of bitcoin represented by the Baskets being created, or an amount of cash sufficient to purchase such

amount of bitcoin, the amount of which is equal to the combined NAV of the number of Shares included in the Baskets being created

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for delivery to the Trust of the amount of Shares represented by the Basket.

The Authorized Participants will deliver only cash

to create Shares and will receive only cash when redeeming Shares.

For a redemption in cash, the Sponsor shall arrange for the

bitcoin represented by the Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed

The Authorized Participants will deliver cash or

bitcoin to create Shares and will receive cash or bitcoin when redeeming Shares.

For a redemption in cash, the Sponsor shall arrange

for the bitcoin represented by the Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed

from the Trust’s account at the Cash Custodian to the Authorized Participant.

The Liquidity Providers as of the date of this

Report, that have agreed to serve as a Liquidity Provider and have consented to be named in the Trust’s registration statement

are JSCT, LLC, Nonco LLC and Cumberland New York LLC.

Additional Liquidity Providers may be added at any time, subject

to the Sponsor’s sole discretion.

In the future, subject to

In-Kind Regulatory Approval, the Trust may elect to permit Authorized Participants to also deliver or direct the delivery of bitcoin

by third parties, or take delivery or direct the taking of delivery of bitcoin by third parties, in connection with in-kind subscription

or redemption transactions.

Based on the current price of bitcoin and corresponding size of the Baskets, the Sponsor does not believe

such size will have a material impact on the arbitrage mechanism.

The Liquidity Providers as of the date of

this Report, that have agreed to serve as a Liquidity Provider and have consented to be named in the Trust’s registration

statement are [JSCT, LLC, Nonco LLC and Cumberland New York LLC] 2 .

Additional Liquidity Providers may be added at any

time, subject to the Sponsor’s sole discretion.

For an “in-kind” subscription, Authorized Participants will deliver, or arrange

for the delivery by the Authorized Participant’s designee of, bitcoin to the Trust’s account with the Bitcoin Custodian

in exchange for Shares when they purchase Shares.

For an “in-kind” redemption transaction with the Trust, when Authorized

Participants redeem Shares, the Trust through the Bitcoin Custodian, will deliver bitcoin to such Authorized Participants, or

a designee thereof, in exchange for their Shares.

Based on the current price of bitcoin and corresponding size of the Baskets,

the Sponsor does not believe such size will have a material impact on the arbitrage mechanism.

Authorized Participants

Authorized Participants are the only persons that may place orders

to create and redeem Baskets.

Authorized Participants are the only persons that may place

orders to create and redeem Baskets.

Authorized Participants must be (1) registered broker-dealers or other securities market participants,

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requirements.

There has yet to be definitive regulatory guidance on whether and how registered broker-dealers can comply with these

rules with regard to transacting in or holding spot Bitcoin.

Until further regulatory clarity emerges regarding whether registered

broker-dealers can hold and deal in Bitcoin under such rules, there is a risk that registered broker-dealers participating in the

in-kind creation or redemption of Shares for Bitcoin may be unable to demonstrate compliance with such requirements.

While compliance

with these requirements would be the broker-dealer’s responsibility, a national securities exchange is required to enforce

compliance by its member broker-dealers with applicable federal securities law and rules.

As a result, the SEC is unlikely to permit

an exchange to adopt listing rules for a product if it is not clear that the exchange’s members would be able to comply with

applicable rules when transacting in the product as designed.

To the extent further regulatory clarity emerges, the Sponsor expects

the Exchange to seek In-Kind Regulatory Approval to amend its listing rules to permit the Trust to create and redeem Shares in-kind

for bitcoin, in which Authorized Participants or their designees would deposit Bitcoin directly with the Trust or receive Bitcoin

directly from the Trust.

However, there can be no assurance as to when such regulatory clarity will emerge, or when the Exchange

will seek or obtain In-Kind Regulatory Approval, if at all.

To become an Authorized Participant, a person must enter into an

agreement with the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets (the “Authorized

On May 15, 2025, the SEC and FINRA withdrew their 2019 joint statement regarding broker-dealer custody of crypto

asset securities, which was widely perceived as prohibiting broker-dealers from offering custodial services for crypto assets that

are not securities.

Additionally, on the same day, the SEC released a set of Frequently Asked Questions (FAQs) clarifying its views

on broker-dealers’ crypto asset activities.

The FAQs stated that (i) SEC Rule 15c3-3 applies only to crypto asset securities,

and (ii) broker-dealers are permitted to facilitate in-kind creations and redemptions in connection with spot crypto exchange-traded

To become an Authorized Participant, a person must enter into

an agreement with the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets (the “Authorized

Participant Agreement”).

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The transaction fee may be reduced, increased or otherwise changed by

Authorized Participants who make deposits (directly in the case of cash creations and, subject to In-Kind Regulatory

Approval, indirectly in the case of bitcoin deposits) with the Trust in exchange for Baskets receive no fees, commissions or other

form of compensation or inducement of any kind from either the Trust or the Sponsor, and no such person has any obligation or responsibility

to the Sponsor or the Trust to effect any sale or resale of Shares.

Each Authorized Participant is required to be registered as a broker-dealer

under the Exchange Act and a member in good standing with FINRA, or exempt from being or otherwise not required to be licensed

as a broker-dealer or a member of FINRA, and qualified to act as a broker or dealer in the states or other jurisdictions where

the nature of its business so requires.

Certain Authorized Participants may also be regulated under federal and state banking laws

and regulations.

Authorized Participants who make deposits (directly in the case of cash creations and, indirectly in the case of bitcoin

deposits) with the Trust in exchange for Baskets receive no fees, commissions or other form of compensation or inducement of any

kind from either the Trust or the Sponsor, and no such person will have any obligation or responsibility to the Sponsor or the

Trust to effect any sale or resale of Shares.

Each Authorized Participant is required to be registered as

a broker-dealer under the Exchange Act and a member in good standing with FINRA, or exempt from being or otherwise not required

to be licensed as a broker-dealer or a member of FINRA, and qualified to act as a broker or dealer in the states or other jurisdictions

where the nature of its business so requires.

Certain Authorized Participants may also be regulated under federal and state banking

laws and regulations.

Each Authorized Participant has its own set of rules and procedures, internal controls and information barriers

as it determines is appropriate in light of its own regulatory regime.

As of the date of this Report, the Authorized Participants that have

consented to be named in the Trust’s registration statement are Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital

Inc., and ABN

As of the date of this Report, the Authorized Participants

that have consented to be named in the Trust’s registration statement are Jane Street Capital, LLC, Virtu Americas LLC, Macquarie

Capital Inc., and ABN

AMRO Clearing USA LLC.

Additional Authorized Participants may be

added at any time, subject to the Sponsor’s discretion.

The following description of the procedures for the creation and

redemption of Baskets is only a summary and a Shareholder should refer to the relevant provisions of the Trust Agreement and the

form of Authorized Participant Agreement for more detail.

The Trust Agreement and form of Authorized Participant Agreement are

incorporated by reference to this Report.

Authorized Participants will place orders through the Transfer Agent.

The Transfer Agent will coordinate with the Sponsor, who will in turn coordinate with the Trust’s Bitcoin Custodian in order

to facilitate settlement of the Shares and bitcoin.

The trading prices of many digital assets, including bitcoin, have

experienced extreme volatility in recent periods and may continue to do so.

Extreme volatility may persist and the value of the

Shares may significantly decline in the future without recovery.

The digital asset markets may be experiencing a bubble or may

experience a bubble again in the future.

Extreme volatility in the future, including further declines in the trading prices of

bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of

The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility

in the price of bitcoin.

In addition, the use of cash creations and redemptions has transaction

costs of buying and selling bitcoin.

These costs include the bid-ask spread along with the operational costs from the labor and

overhead involved in calculating, executing, monitoring, and accounting for transactions in the bitcoin markets and related cash

The Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to Basket creation

and redemption are the responsibility of the Authorized Participant.

Under ordinary circumstances, the Trust does not anticipate

that there would be fees or costs related to purchases and sales of bitcoin because Clearing Services are provided to the Trust

without additional charges by the Bitcoin Custodian.

Additional Authorized Participants

may be added at any time, subject to the Sponsor’s discretion.

The following description of the procedures for the creation

and redemption of Baskets is only a summary and a Shareholder should refer to the relevant provisions of the Trust Agreement and

the form of Authorized Participant Agreement for more detail.

The Trust Agreement and form of Authorized Participant Agreement

are incorporated by reference to this Report.

Authorized Participants will place orders through the Transfer

The Transfer Agent will coordinate with the Sponsor, who will in turn coordinate with the Trust’s Bitcoin Custodian

in order to facilitate settlement of the Shares and bitcoin.

The trading prices of many digital assets, including bitcoin,

have experienced extreme volatility in recent periods and may continue to do so.

Extreme volatility may persist and the value of

the Shares may significantly decline in the future without recovery.

The digital asset markets may be experiencing a bubble or

may experience a bubble again in the future.

Extreme volatility in the future, including further declines in the trading prices

of bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all

of their value.

The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of

volatility in the price of bitcoin.

In addition, the use of cash creations and redemptions has

transaction costs of buying and selling bitcoin.

These costs include the bid-ask spread along with the operational costs from the

labor and overhead involved in calculating, executing, monitoring, and accounting for transactions in the bitcoin markets and related

cash movements.

The Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to Basket

creation and redemption are the responsibility of the Authorized Participant.

Under ordinary circumstances, the Trust does not

anticipate that there would be fees or costs related to purchases and sales of bitcoin because Clearing Services are provided to

the Trust without additional charges by the Bitcoin Custodian.

To the extent there are unusual or unanticipated fees or costs associated

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Creation Procedures

On any business day, an Authorized Participant may place an order

with the Transfer Agent to create one or more Baskets.

Currently, creation orders are only accepted in cash.

For purposes of processing

creation and redemption orders, a “business day” means any day other than a day when the Exchange is closed for regular

trading (“Business Day”).

Purchase orders must be placed by the order cut-off time for a purchase order on a Business

Day (the “Creation Order Cut-Off Time”).

On any business day, an Authorized Participant may place an

order with the Transfer Agent to create one or more Baskets.

Currently, creation orders are accepted in cash or in-kind.

of processing creation and redemption orders, a “business day” means any day other than a day when the Exchange is

closed for regular trading (“Business Day”).

Purchase orders must be placed by the order cut-off time for a purchase

order on a Business Day (the “Creation Order Cut-Off Time”).

The Creation Order Cut-Off Time is 3:59:59 p.m.

ET on a trade date or as otherwise

communicated by the Sponsor.

The day on which an order is received by the Transfer Agent is considered the purchase order date.

Prior to the delivery of Baskets for a purchase order, the Authorized

Participant must also have wired to the Transfer Agent the nonrefundable transaction fee due for the creation order to offset the

transfer and other transaction costs associated with the issuance of the Basket.

Authorized Participants may not withdraw a creation

a trade date or as otherwise communicated by the Sponsor.

The day on which an order is received by the Transfer Agent is considered

the purchase order date.

Prior to the delivery of Baskets for a purchase order, the

Authorized Participant must also have wired to the Transfer Agent the nonrefundable transaction fee due for the creation order

to offset the transfer and other transaction costs associated with the issuance of the Basket.

Authorized Participants may not

withdraw a creation request.

The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement.

creation order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian or bitcoin, if In-Kind

Regulatory Approval is obtained.

By placing a creation order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian or bitcoin,

with the Bitcoin Custodian.

If an Authorized Participant fails to consummate the foregoing, the order will be cancelled.

The total deposit of cash required to create each Basket is an amount

of cash that is in the same proportion to the total assets of the Trust, net of accrued expenses and other liabilities, on the

date the order to purchase is properly received, as the number of Shares to be created under the purchase order is in proportion

to the total number of Shares outstanding on the date the order is received.

date for a purchase order, following receipt of the purchase order

from the Authorized Participant, the Trust shall, in its sole discretion, select a Liquidity Provider and execute a trade to purchase

bitcoin from that Liquidity Provider in the amount of the total deposit required to create each Basket (“Basket Deposit”),

with the purchased bitcoin to be delivered by the Liquidity Provider on the settlement date for a purchase order (which shall be

the Business Day immediately following the trade date unless the Trust, Sponsor, Authorized Participant agree to a different date)

(the “Creation Settlement Date”) in exchange for a cash price to be delivered by the Trust on Creation Settlement Date.

The Liquidity Provider, not the Authorized Participant, shall be responsible for delivering bitcoin to the Trust.

Subject to In-Kind Regulatory Approval, of which there can be no

assurance that such approval will ever be obtained following an Authorized Participant’s purchase order, the Trust’s

Bitcoin Custodian account must be credited with the required bitcoin by the end of the business day following the purchase order

date, or the Trust’s Cash Custodian account must be credited with the required cash by the end of the business day following

the purchase order date, as applicable.

Upon receipt of the bitcoin deposit amount in the Trust’s Bitcoin Account, or the

cash deposit amount in the Trust’s Cash Custodian account, the Bitcoin Custodian or Cash Custodian, respectively, will notify

the Transfer Agent, the Authorized Participant, and the Sponsor that the bitcoin or cash has been deposited.

The Transfer Agent

will then direct DTC to credit the number of Shares created to the applicable DTC account.

No Shares will be issued unless and until the Bitcoin Custodian (in

the case of in-kind deposits) or Cash Custodian (in the case of cash deposits) has informed the Transfer Agent that the bitcoin

For a cash creation the total deposit of cash required to

create each Basket is an amount of cash that is in the same proportion to the total assets of the Trust, net of accrued expenses

and other liabilities, on the date the order to purchase is properly received, as the number of Shares to be created under the

purchase order is in proportion to the total number of Shares outstanding on the date the order is received.

date for a purchase order (the “Creation Trade Date”),

following receipt of the purchase order from the Authorized Participant, the Trust shall, in its sole discretion, select a Liquidity

Provider and execute a trade to purchase bitcoin from that Liquidity Provider in the amount of the total deposit required to create

each Basket (“Basket Deposit”) (the calculation of which is explained below), with the purchased bitcoin to be delivered

by the Liquidity Provider on the settlement date for a purchase order (which shall be the Business Day immediately following the

trade date unless the Trust, Sponsor, Authorized Participant agree to a different date) (the “Creation Settlement Date”)

in exchange for a cash price to be delivered by the Trust on Creation Settlement Date.

The Liquidity Provider, not the Authorized

Participant, shall be responsible for delivering bitcoin to the Trust.

The Authorized Participant shall be responsible for delivering

cash to the Trust.

For an in-kind creation, following an Authorized Participant’s

placement of a purchase order, the Trust’s Bitcoin Custodian account must be credited with the required bitcoin by the end

of the business day following the purchase order date, or in the case of cash deposits, the Trust’s Cash Custodian account

must be credited with the required cash by the end of the business day following the purchase order date, as applicable.

Authorized Participant or its designee fails to consummate the foregoing, the order shall be cancelled.

Upon receipt of the bitcoin

deposit amount in the Trust’s Bitcoin Custodian account, in the case of in-kind creations, or the cash deposit amount in

the Trust’s Cash Custodian account, in the case case of cash creations, the Trust will notify the Transfer Agent to release

the shares to the Authorized Participant by directing DTC to credit the number of Shares created to the applicable DTC account.

No Shares will be issued unless and until the Bitcoin Custodian

(in the case of in-kind deposits) or Cash Custodian (in the case of cash deposits) has informed the Transfer Agent that the bitcoin

or cash (as applicable) has been received.

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cold storage until such transfers can occur.

Bitcoin held in the Trust’s Bitcoin Custodian account is the

property of the Trust and is not leased, or loaned under any circumstances.

Bitcoin held in the Trust’s Bitcoin Custodian account

is the property of the Trust and is not leased, or loaned under any circumstances.

Determination of Required Deposits

The “Basket Cash Component” changes from day to day.

To determine the Basket Cash Component, the Administrator starts by determining the number of bitcoin held by the Trust as of the

opening of business on that trade date, and subtracts the amount of bitcoin constituting estimated accrued but unpaid fees and

expenses of the Trust as of the opening of business on that trade date.

Fractions of a bitcoin smaller than 0.000001 are disregarded

for purposes of the computation of the Basket Deposit.

Second, this figure, in bitcoin, is divided by the quotient of the number

of Shares outstanding at the opening of business on trade date divided by 25,000.

This produces the Basket Deposit, which is the

number of bitcoin attributable to each Basket as of the opening of business on trade date.

Third, the resulting bitcoin amount

is then valued, in cash, at the Index calculated on trade date, or in accordance with the other valuation policies described in

the Prospectus if the Index is not available.

This produces the Basket Cash Component.

The Basket Deposit, and the Basket Cash

Component, so determined is communicated via electronic mail message to all Authorized Participants, and made available on the

Sponsor’s website for the Shares.

The Exchange also publishes the Basket Deposit determined by the Administrator as indicated

By the end of day ET (or such other time as the parties may agree)

on the trade date for an order for the purchase of Baskets of the Trust, the Administrator will calculate and transmit the (1)

the Basket Cash Component, (2) an amount of cash sufficient to pay any applicable transaction fee, redemption fee and any additional

fixed and/or variable charges, costs, taxes, or expenses, applicable to creation orders or redemption orders effected fully in

cash (the “Cash Amount”), and (3) any amount by which the actual cash purchase price of the bitcoin from the Liquidity

Provider exceeds the adjusted Basket Cash Component (“Purchase Slippage”), to the Authorized Participant (collectively,

the Basket Cash

Component, the Cash Amount, and the Purchase Slippage, the “Required

Cash Creation Total”), which the Authorized Participant shall be responsible for delivering in cash on the Creation Settlement

Date to the Trust’s account at the Cash Custodian bitcoin in cleared, immediately available funds by 1:00 p.m.

acknowledges that, if the actual cash purchase price of bitcoin from the Liquidity Provider is below the Basket Cash Component,

the Authorized Participant shall be entitled to retain the difference and the Required Cash Creation Total shall be reduced accordingly.

In the case of a cash creation only, by the end of day Eastern

time (or such other time as the parties may agree) on the trade date for a purchase order, the Administrator will calculate and

transmit the Required Cash Creation Total, consisting of (1) the Basket Cash Component, (2) Cash Amount, and (3) any Purchase Slippage,

to the Authorized Participant, which the Authorized Participant shall be responsible for delivering in cash on the settlement date

for a purchase order (which shall be the Business Day immediately following the trade date unless the Trust, Sponsor, Authorized

Participant agree to a different date) (the “Creation Settlement Date”) to the Trust’s account at the Cash Custodian

in cleared, immediately available funds by 1:00 p.m.

Eastern time.

The Trust acknowledges that, if the actual cash purchase price

of bitcoin from the Liquidity Provider is below the Basket Cash Component, the Authorized Participant shall be entitled to retain

the difference and the Required Cash Creation Total shall be reduced accordingly.

In the case of an in-kind creation only,

by the end of day Eastern Standard Time (or such other time as the parties may agree) on Creation Trade Date, the Administrator

will calculate and transmit the Creation Basket Deposit, to the Authorized Participant, which the Authorized Participant shall

be responsible for delivering in bitcoin on Creation Settlement Date to the Trust’s Custodian Account.

Delivery of Required Deposits

On the Creation Settlement Date, the Authorized Participant who places

a purchase order must follow the procedures outlined in the “Creation Procedures” section of this Report.

shall instruct the Cash Custodian to transfer the cash proceeds to the Trust’s Fiat Account.

The Liquidity Provider delivers

bitcoin to the Trust’s Clearing Account in exchange for the cash purchase price, a delivery facilitated by the Bitcoin Custodian

under the Clearing Agreement.

Upon settlement by the Bitcoin Custodian, in its capacity as the provider of Clearing Services pursuant

to the Clearing Agreement, of the bitcoin purchase from the Liquidity Provider and the deposit of bitcoin in the Trust’s

Clearing Account, the Trust instructs the Transfer Agent to release the Shares to the Authorized Participant, and the Transfer

Agent directs DTC to credit the number of Shares ordered to the applicable DTC account, by close of business on the Creation Settlement

Date and the creation order is settled.

If the bitcoin purchase transaction between the Trust and the Liquidity Provider fails

For a cash creation, on the Creation Settlement Date, the

Authorized Participant who places a purchase order must follow the procedures outlined in the “Creation Procedures”

section of the prospectus.

In the case of a cash creation only, the Trust shall instruct the Cash Custodian to transfer the cash

proceeds to the Trust’s Fiat Account.

The Liquidity Provider delivers bitcoin to the Trust’s Clearing Account in exchange

for the cash purchase price, a delivery facilitated by the Bitcoin Custodian under the Clearing Agreement.

Upon settlement by the

Bitcoin Custodian, in its capacity as the provider of Clearing Services pursuant to the Clearing Agreement, of the bitcoin purchase

from the Liquidity Provider and the deposit of bitcoin in the Trust’s Clearing Account, the Trust shall instruct the Transfer

Agent to release the Shares to the Authorized Participant, and the Transfer Agent shall direct DTC to credit the number of Shares

ordered to the applicable DTC account, by 1:00 p.m.

Eastern time on the Creation Settlement Date and the Creation Order shall be

If the bitcoin purchase transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant

shall have the option to cancel the Creation Order, in which case the Trust will return the Required Cash Creation Total less the

Cash Amount to the Authorized Participant and the Shares will not be issued, or the Sponsor may use an alternative execution method

for the Trust to purchase bitcoin, in which case the Authorized Participant agrees and acknowledges it is responsible for any Purchase

Slippage and Cash Amount relating to such alternative execution method.

The expense and risk of delivery and ownership of cash

until such cash has been received in immediately available, cleared federal funds by the Cash Custodian on behalf of the Trust

will be borne solely by the Authorized Participant.

For an in-kind creation, on the Creation Settlement Date,

the Authorized Participant or its designee shall deposit the amount of bitcoin specified in the Creation Basket Deposit in the

Trust’s account at the Bitcoin Custodian by 1:00 p.m.

Eastern time.

Upon settlement by the Bitcoin Custodian, the Trust shall

instruct the Transfer Agent to release the Shares to the Authorized Participant, and the Transfer Agent shall direct DTC to credit

the number of Shares ordered to the applicable DTC account, by close of business on the Creation Settlement Date and the Creation

Order shall be settled.

If the bitcoin deposit transaction between the Trust and the Authorized Participant or its designee fails

to settle, the Authorized Participant shall have the option to cancel the Creation Order, in which case the Trust will return the

Required Cash Creation Total less the Cash Amount to the Authorized Participant and the Shares will not be issued, or the Sponsor

may use an alternative execution method for the Trust to purchase bitcoin, in which case the Authorized Participant agrees and

acknowledges it is responsible for any Purchase Slippage and Cash Amount relating to such alternative execution method.

and risk of delivery and ownership of cash until such cash has been received in immediately available, cleared federal funds by

the Cash Custodian on behalf of the Trust will be borne solely by the Authorized Participant.

Creation Basket Deposit to the Authorized Participant and the Shares will not be issued, or the Sponsor may use an alternative

execution method for the Trust to purchase bitcoin, in which case the Authorized Participant agrees and acknowledges it is responsible

for providing any Basket Cash Component, plus any Purchase Slippage and Cash Amount, relating to such alternative execution method.

The expense and risk of delivery and ownership of bitcoin until such bitcoin has been credited to the Trust’s custody account

by the Bitcoin Custodian on behalf of the Trust will be borne solely by the Authorized Participant.

Rejection of Purchase Orders

The Sponsor or its designee has the absolute right, but does not

have any obligation, to reject any purchase order or Basket Deposit if the Sponsor determines that:

The Sponsor or its designee has the absolute right, but does

not have any obligation, to reject any purchase order or Basket Deposit if the Sponsor determines that:

● the purchase order or Basket Deposit is not in proper form;

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● the acceptance of the purchase order or the Basket Deposit would have adverse tax consequences to the Trust or its Shareholders;

the acceptance or receipt of the purchase order or the Basket Deposit would, in the opinion of counsel to the Sponsor,

● the acceptance or receipt of the purchase order or the Basket Deposit would, in the opinion of counsel to the Sponsor, be unlawful;

● circumstances outside the control of the Trust, the Sponsor, the Marketing Agent or the Bitcoin Custodian or Cash Custodian

make it, for all practical purposes impracticable or not feasible to process Baskets (including if the Sponsor determines

that the investments available to the Trust at that time will not enable it to meet its investment objective).

None of the Sponsor, the Transfer Agent, the Bitcoin Custodian or

the Cash Custodian will be liable for the rejection of any purchase order or Basket Deposit.

make it, for all practical purposes impracticable or not feasible to process Baskets (including if the Sponsor determines that

the investments available to the Trust at that time will not enable it to meet its investment objective).

None of the Sponsor, the Transfer Agent, the Bitcoin Custodian

or the Cash Custodian will be liable for the rejection of any purchase order or Basket Deposit.

Redemption Procedures

The procedures by which an Authorized Participant can redeem one

or more Baskets mirror the procedures for the creation of Baskets with an additional safeguard on bitcoin or cash being removed

from the Trust’s Bitcoin Custodian or Cash Custodian account.

Currently, redemption orders are only

processed in cash.

On any business day, an Authorized Participant

may place an order with the Transfer Agent to redeem one or more Baskets.

Redemption orders must be placed by the order cut-off

time for an order on a Business Day (the “Redemption Order Cut-Off Time”).

The Redemption Order Cut-Off Time is 3:59:59

ET on a trade date or as otherwise communicated by the Sponsor.

A redemption order will be effective on the date it is received

by the Transfer Agent (“Redemption Order Date”).

On the business day on which any order redeeming Baskets of the Trust

is placed (the “Redemption Trade Date”), following receipt of the redemption order from the Authorized Participant,

the Trust shall instruct the Bitcoin Custodian to move the bitcoin in the amount of the Basket Deposit out of the Trust’s

The procedures by which an Authorized Participant can redeem

one or more Creation Baskets mirror the procedures for the creation of Creation Baskets with an additional safeguard on bitcoin

or cash being removed from the Trust’s Bitcoin Custodian or Cash Custodian account.

Currently, redemption orders are processed

in cash or bitcoin.

On any business day, an Authorized Participant may place an order with the Transfer Agent to redeem one or

more Creation Baskets.

Redemption orders must be placed by the order cut-off time for an order on a Business Day (the “Redemption

Order Cut-Off Time”).

The Redemption Order Cut-Off Time is 3:59:59 p.m.

Eastern time on a trade date or as otherwise communicated

by the Sponsor.

A redemption order will be effective on the date it is received by the Transfer Agent (“Redemption Order

For a cash redemption, on the trade date for a Redemption

Order (the “Redemption Trade Date”), following receipt of the Redemption Order from the Authorized Participant, the

Trust shall instruct the Bitcoin Custodian to move the bitcoin in the amount of the Creation Basket Deposit out of the Trust’s

account at the Bitcoin Custodian into the Trust’s Clearing Account.

1 unchanged sentence

shall select a Liquidity Provider and execute a trade to sell the bitcoin in exchange for cash to be delivered on the settlement

date for a redemption order (which shall be the Business Day immediately following the Redemption Trade Date unless the Trust,

date for a Redemption Order (which shall

be the Business Day immediately following the Redemption Trade Date unless the Trust,

Sponsor, and Authorized Participant agree to a different date) (the “Redemption Settlement Date”).

The Liquidity Providers

as of the date of this Report, that have agreed to serve as a Liquidity Provider and have consented to be named in the Trust’s

registration statement are JSCT, LLC, Nonco LLC and Cumberland New York LLC.

Additional Liquidity Providers may be added at any

time, subject to the Sponsor’s sole discretion.

The Redemption Settlement Date shall be the immediately following Business

Day after the Redemption Trade Date unless the parties otherwise agree in writing.

The Liquidity Provider, not the Authorized Participant,

shall be responsible for purchasing bitcoin from the Trust.

By placing a redemption order, an Authorized Participant agrees to

facilitate the delivery of the Basket of Shares.

Once the Transfer Agent notifies the Bitcoin Custodian or Cash Custodian

(as applicable), the Sponsor and the Administrator that the Shares have been received in the Trust’s DTC account, the Administrator

instructs the Bitcoin Custodian or Cash Custodian (as applicable) to transfer the redemption bitcoin or cash amount from the Trust’s

Bitcoin Custodian or Cash Custodian account to the Authorized Participant.

Bitcoin held in the Trust’s Bitcoin Account is the property

of the Trust and is not leased, or loaned under any circumstances.

as of the date of this Report, that have agreed to serve as a Liquidity Provider are JSCT, LLC, Nonco LLC and Cumberland DRW LLC.

Additional Liquidity Providers may be added at any time, subject to the Sponsor’s sole discretion.

The Redemption Settlement

Date shall be the immediately following Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing.

The Liquidity Provider, not the Authorized Participant, shall be responsible for purchasing bitcoin from the Trust.

a Redemption Order, an Authorized Participant agrees to facilitate the delivery of the Basket of Shares.

For an in-kind redemption transaction with the Trust, on the

Redemption Trade Date, the Trust shall instruct the Bitcoin Custodian to deliver Bitcoin to the Authorized Participant or its designee

on the Redemption Settlement Date.

The Redemption Settlement Date, in the case of an in-kind redemption order, shall be the immediately

following Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing.

The Authorized Participant,

or its designee, shall be responsible for receiving bitcoin from the Trust in the case of an in-kind redemption order.

Once the Transfer Agent notifies the Bitcoin Custodian or

Cash Custodian (as applicable), the Sponsor and the Administrator that the Shares have been received in the Trust’s DTC account,

the Administrator shall instruct the Bitcoin Custodian or Cash Custodian (as applicable) to transfer the redemption bitcoin or

cash amount from the Trust’s Bitcoin Custodian or Cash Custodian account to the Authorized Participant.

Bitcoin held in the Trust’s Bitcoin Custodian account

is the property of the Trust and is not leased, or loaned under any circumstances.

Determination of Redemption Distribution

ET (or such other time as the parties may agree) on

the Redemption Trade Date, the Administrator will calculate and transmit (1) Basket Cash Component, minus (2) the Cash Amount,

and minus (3) any amount by which the actual cash sale price of the bitcoin to the Liquidity Provider is less than the adjusted

Basket Cash Component (“Redemption Slippage”), to the Authorized Participant (collectively, the Basket Cash Component,

minus the Cash Amount, minus the Purchase Slippage, the “Required Cash Redemption Total”), which the Trust shall be

responsible for instructing the Cash Custodian to deliver in cash on Redemption Settlement Date to the Authorized Participant’s

Eastern time (or such other time as the parties

may agree) on the Redemption Trade Date, in the case of a cash Redemption Order, the Administrator will calculate the Required

Cash Redemption Total that the Trust is responsible for delivering in cash on Redemption Settlement Date to the Authorized Participant’s

designated bank account.

The Trust acknowledges that, if the actual cash sale price realized from selling bitcoin to the Liquidity

Provider is above the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required

Cash Redemption Total shall be increased accordingly.

The Required Cash Redemption Total consists of (1) Basket Cash Component, minus (2) the Cash Amount, and

minus (3) any Redemption Slippage.

The Trust acknowledges that, if the actual cash sale price realized from selling bitcoin to

the Liquidity Provider is above the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference

and the Required Cash Redemption Total shall be increased accordingly.

Eastern time (or such other

time as the parties may agree) on Redemption Trade Date, in the case of an in-kind Redemption Order, the Administrator will calculate

the Creation Basket Deposit that the Trust is responsible for delivering in bitcoin on Redemption Settlement Date to the Authorized

Participant’s or its designee’s account at the Bitcoin Custodian.

Delivery of Redemption Distribution

On the Redemption Settlement Date, the Liquidity Provider delivers

cash to the Trust’s Fiat Account in exchange for the cash purchase price, as facilitated by the Bitcoin Custodian under the

Clearing Agreement.

Upon settlement of the bitcoin sale by the Trust to the Liquidity Provider and the receipt of the Liquidity

Provider’s cash in the Trust’s Fiat Account, the Trust instructs the Bitcoin Custodian to transfer the cash to the

Trust’s Cash Custodian account.

The Trust then instructs the Transfer Agent to deliver the Authorized Participant’s

Shares in the Basket Deposit back to the Trust, in exchange for which the Trust instructs the Cash Custodian to transfer the Required

Cash Redemption Total to the Authorized Participant’s designated bank account and the redemption order is settled.

bitcoin sale transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the

option to cancel the redemption order, in which case the Trust will retain its bitcoin and the Authorized Participant will retain

the associated Shares and will not receive any cash, or the Sponsor may use an

alternative execution method for the Trust to sell bitcoin, in which

case the Authorized Participant agrees and acknowledges it is responsible for any Redemption Slippage and Cash Amount relating

to such alternative execution method.

If the Trust’s DTC account has not been credited with all of the Baskets to be redeemed

by such time, the redemption distribution will also be delayed.

On the Redemption Settlement Date, in the case of a cash Redemption

Order, the Liquidity Provider delivers cash to the Trust’s Fiat Account in exchange for bitcoin, as facilitated by the Bitcoin

Custodian under the Clearing Agreement.

Upon settlement of the bitcoin sale by the Trust to the Liquidity Provider and the receipt

of the Liquidity Provider’s cash in the Trust’s Fiat Account, the Trust shall instruct the Bitcoin Custodian to transfer

the cash to the Trust’s Cash Custodian account.

The Trust shall then instruct the Transfer Agent to deliver the Authorized

Participant’s Shares in the Creation Basket Deposit back to the Trust, in exchange for which the Trust shall instruct the

Cash Custodian to transfer the Required Cash Redemption Total to the Authorized Participant’s designated bank account and

the Redemption Order shall be settled.

If the bitcoin sale transaction between the Trust and the Liquidity Provider fails to settle,

the Authorized Participant shall have the option to cancel the Redemption Order, in which case the Trust will retain its bitcoin

and the Authorized Participant will retain the associated Shares and will not receive any cash, or the Sponsor may use an alternative

execution method for the Trust to sell bitcoin, in which case the Authorized Participant agrees and acknowledges it is responsible

for any Redemption Slippage and Cash Amount relating to such alternative execution method.

If the Trust’s DTC account has

not been credited with all of the Creation Baskets to be redeemed by such time, the redemption distribution will also be delayed.

On the Redemption Settlement Date, in the case of an in-kind

Redemption Order, the Trust shall instruct the Transfer Agent to deliver the Authorized Participant’s Shares in the Creation

Basket Deposit back to the Trust, in exchange for which the Trust shall instruct the Bitcoin Custodian to transfer the bitcoin

in the Creation Basket Deposit to the Authorized Participant’s or its designee’s account at the Bitcoin Custodian and

the Redemption Order shall be settled.

The Trust shall have no obligation to instruct the Bitcoin Custodian to transfer bitcoin

to the Authorized Participant or its designee unless and until the Trust’s DTC account has been credited with all of the

Shares relating to the Creation Baskets to be

If the bitcoin transfer between the Trust’s Bitcoin Custodian Account

and the Authorized Participant’s or its designee’s Bitcoin Custodian account fails to settle, the Authorized Participant

shall have the option to cancel the Redemption Order, in which case the Trust will retain its bitcoin and the Authorized Participant

will retain the associated Shares and will not receive any bitcoin, or the Sponsor may use an alternative execution method for

the Trust to sell bitcoin, in which case the Authorized Participant will receive cash, and the Authorized Participant agrees and

acknowledges it is responsible for any Redemption Slippage and Cash Amount relating to such alternative execution method.

Suspension or Rejection of Redemption Orders

23 unchanged sentences

Redemption orders must be made in whole Baskets.

The Sponsor acting

by itself or through the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement

may, in its sole discretion, reject any redemption order (1) the Sponsor determines not to be in proper form, (2) the fulfillment

of which its counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the control

of the Sponsor, the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement

acting by itself or through the person authorized to take redemption orders in the manner provided in the Authorized Participant

Agreement may, in its sole discretion, reject any redemption order (1) the Sponsor determines not to be in proper form, (2) the

fulfilment of which its counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the

control of the Sponsor, the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement

or the Bitcoin Custodian make it for all practical purposes not feasible for the Shares to be delivered under the redemption order.

1 unchanged sentence

to 25,000 Shares (i.e., 1 Basket) or less.

The Marketing Agent shall notify the Authorized Participant of a

rejection or suspension of any redemption order.

The Marketing Agent is under no duty, however, to give notification of any specific

defects or irregularities nor shall the Marketing Agent or the Trust incur any liability for the failure to give any such notification.

The Marketing Agent shall notify the Authorized Participant

of a rejection or suspension of any redemption order.

The Marketing Agent is under no duty, however, to give notification of any

specific defects or irregularities nor shall the Marketing Agent or the Trust incur any liability for the failure to give any such

notification.

The Trust and the Marketing Agent may not revoke a previously accepted redemption order.

Creation and Redemption Transaction Fee

To compensate the Transfer Agent for expenses incurred in connection

with the creation and redemption of Baskets, an Authorized Participant is required to pay a transaction fee to the Transfer Agent

to create or redeem Baskets, which does not vary in accordance with number of Baskets in such order.

The transaction fee may be

reduced, increased or otherwise changed by the Sponsor.

The Sponsor will notify DTC of any change in the transaction fee and will

not implement any increase in the fee for the redemption of baskets until thirty (30) days after the date of notice.

To compensate the Transfer Agent for expenses incurred in

connection with the creation and redemption of Baskets, an Authorized Participant is required to pay a transaction fee to the Transfer

Agent to create or redeem Baskets, which does not vary in accordance with number of Baskets in such order.

The transaction fee

may be reduced, increased or otherwise changed by the Sponsor.

The Sponsor will notify DTC of any change in the transaction fee

and will not implement any increase in the fee for the redemption of baskets until thirty (30) days after the date of notice.

Tax Responsibility

Authorized Participants are responsible for

any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable

Authorized Participants are responsible

for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable

to the creation or redemption of Baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized

3 unchanged sentences

The following discussion of the material U.S.

federal income tax

consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S.

Shareholder (as defined below)

represents, insofar as it describes conclusions as to U.S.

federal income

tax consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S.

Shareholder (as defined

below) represents, insofar as it describes conclusions as to U.S.

federal income tax law and subject to the limitations and qualifications

33 unchanged sentences

● a corporation (or entity treated as a corporation for U.S.

federal income tax purposes) created or organized in or under

the laws of the United States, any state thereof or the District of Columbia;

federal income tax purposes) created or organized in or under the

laws of the United States, any state thereof or the District of Columbia;

● an estate, the income of which is includible in gross income for U.S.

federal income tax purposes regardless of its source;

a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust

and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership or other entity or arrangement treated as a partnership

federal income tax purposes holds Shares, the tax treatment of a partner generally depends upon the status of the partner

and the activities of the partnership.

If you are a partner of a partnership holding Shares, the discussion below may not be applicable

and we urge you to consult your own tax adviser for the U.S.

federal income tax implications of the purchase, ownership and disposition

of such Shares.

● a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and

one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership or other entity or arrangement treated as

a partnership for U.S.

federal income tax purposes holds Shares, the tax treatment of a partner generally depends upon the status

of the partner and the activities of the partnership.

If you are a partner of a partnership holding Shares, the discussion below

may not be applicable and we urge you to consult your own tax adviser for the U.S.

federal income tax implications of the purchase,

ownership and disposition of such Shares.

Taxation of the Trust

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federal income

tax purposes (and the following discussion assumes such classification).

As a result, the Trust itself should not be subject to

tax purposes.

If the Trust is properly treated as a grantor trust for U.S.

federal income tax purposes, the Trust itself should

not be subject to U.S.

federal income tax.

Instead, the Trust’s income and expenses should “flow through” to the Shareholders,

and the Trustee will report the Trust’s income, gains, losses and deductions to the Internal Revenue Service (“IRS”)

on that basis.

Instead, the Trust’s income and expenses should “flow through” to

the Shareholders, and the Trustee will report the Trust’s income, gains, losses and deductions to the Internal Revenue Service

(“IRS”) on that basis.

The opinion of Clifford Chance US LLP is not binding on the IRS or any court.

Accordingly, there can be no assurance

that the IRS will agree with the conclusions of counsel’s opinion and it is possible that the IRS or another tax authority

could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position.

the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust for U.S.

income tax purposes or with respect to any other matter.

If the IRS were to assert successfully that the Trust is not classified

as a “grantor trust,” the Trust would likely be classified as a partnership for U.S.

federal income tax purposes, which

may affect the timing and other tax consequences to the Shareholders, and might be classified as a publicly traded partnership

that would be taxable as a corporation for U.S.

federal income tax purposes, in which case the Trust would be taxed in the same

manner as a regular corporation on its taxable income and distributions to Shareholders out of the earnings and profits of the

Trust would be taxed to Shareholders as ordinary dividend income.

However, due to the uncertain treatment of digital assets for

federal income tax purposes, there can be no assurance in this regard.

Except as otherwise indicated, the remainder of this

discussion assumes that the Trust is classified as a grantor trust for U.S.

Accordingly, there

can be no assurance that the IRS will agree with the conclusions of counsel’s opinion and it is possible that the IRS or

another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary

Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust

federal income tax purposes or with respect to any other matter.

If the IRS were to assert successfully that the Trust is not

classified as a “grantor trust,” the Trust might be classified as a partnership for U.S.

federal income tax purposes.

If the Trust were classified as a partnership for U.S.

federal income tax purposes, the tax consequences of owning Shares generally

would not be materially different from the tax consequences described herein, although there might be certain differences, including

with respect to timing of the recognition of taxable income or loss.

In addition, tax information reports provided to beneficial

owners of Shares would be made in a different form.

If the Trust were not classified as either a grantor trust or a partnership

federal income tax purposes, it generally would be classified as a corporation for such purposes.

If it were treated as

a corporation, the Trust would be subject to entity-level U.S.

federal income tax (currently at the rate of 21%), plus possible

state and/or local taxes on its net taxable income, and certain distributions made by the Trust to Shareholders would be treated

as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits.

Except as otherwise indicated,

the remainder of this discussion assumes the correctness of the opinion of Clifford Chance US LLP, and that the Trust is classified

as a grantor trust for U.S.

federal income tax purposes.

Taxation of U.S.

Shareholders will be treated, for U.S.

federal income tax purposes,

as if they directly owned a pro rata share of the underlying assets held in the Trust.

Shareholders also will be treated as if

they directly received their respective pro rata shares of the Trust’s income, if any, and as if they directly incurred their

respective pro rata shares of the Trust’s expenses.

In the case of a Shareholder that acquires its Shares as part of the

creation of a Basket (if In-Kind Regulatory Approval is obtained), the delivery of bitcoin to the Trust in exchange for a pro rata

share of the underlying bitcoin represented by the Shares will not be a taxable event to the Shareholder, and the Shareholder’s

tax basis and holding period for the Shareholder’s pro rata share of the bitcoin held in the Trust will be the same as its

tax basis and holding period for the bitcoin delivered in exchange therefor.

For purposes of this discussion, and unless stated

otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price per Share.

Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their

own tax advisers as to the determination of the tax basis and holding period for the underlying bitcoin related to such Shares.

Current IRS guidance on the treatment of convertible virtual currencies

classifies bitcoin as “property” that is not currency for U.S.

federal income tax purposes and clarifies that bitcoin

could be held as a capital asset, but it does not address several other aspects of the U.S.

federal income tax treatment of bitcoin.

federal income tax

purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust.

Shareholders also will be treated

as if they directly received their respective pro rata shares of the Trust’s income, if any, and as if they directly incurred

their respective pro rata shares of the Trust’s expenses.

In the case of a Shareholder that acquires its Shares as part of

the creation of a Basket, the delivery of bitcoin to the Trust in exchange for a pro rata share of the underlying bitcoin represented

by the Shares will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the

Shareholder’s pro rata share of the bitcoin held in the Trust will be the same as its tax basis and holding period for the

bitcoin delivered in exchange therefor.

For purposes of this discussion, and unless stated otherwise, it is assumed that all of

a Shareholder’s Shares are acquired on the same date and at the same price per Share.

Shareholders that hold multiple lots

of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination

of the tax basis and holding period for the underlying bitcoin related to such Shares.

Current IRS guidance on the treatment of convertible virtual

currencies classifies bitcoin as “property” that is not currency for U.S.

federal income tax purposes and clarifies

that bitcoin could be held as a capital asset, but it does not address several other aspects of the U.S.

federal income tax treatment

Because bitcoin is a new technological innovation, the U.S.

federal income tax treatment of bitcoin or transactions relating to

investments in bitcoin may evolve and change from those discussed below, possibly with retroactive effect.

In this regard, the

IRS indicated that it has made it a priority to issue additional guidance related to the taxation of virtual asset transactions,

such as transactions involving bitcoin.

While it has started to issue such additional guidance, whether any future guidance will

adversely affect the U.S.

federal income tax treatment of an investment in bitcoin or in transactions relating to investments in

bitcoin is unknown.

Moreover, future developments that may arise with respect to digital assets may increase the uncertainty with

respect to the treatment of digital assets for U.S.

federal income tax treatment of bitcoin or transactions

relating to investments in bitcoin may evolve and change from those discussed below, possibly with retroactive effect.

regard, the IRS indicated that it has made it a priority to issue additional guidance related to the taxation of virtual asset

transactions, such as transactions involving bitcoin.

While it has started to issue such additional guidance, whether any future

guidance will adversely affect the U.S.

federal income tax treatment of an investment in bitcoin or in transactions relating to

investments in bitcoin is unknown.

Moreover, future developments that may arise with respect to digital assets may increase the

uncertainty with respect to the treatment of digital assets for U.S.

federal income tax purposes.

This discussion assumes that any bitcoin the Trust

may hold is properly treated for U.S.

federal income tax purposes as property that may be held as a capital asset and is not currency

for purposes of the provisions of the Code relating to foreign currency gain and loss.

Although the Trust generally does not intend to sell bitcoin, it

may use bitcoin to pay certain expenses of the Trust, which under current IRS guidance will be treated as a sale of such bitcoin,

This discussion assumes that

any bitcoin the Trust may hold is properly treated for U.S.

federal income tax purposes as property that may be held as a capital

asset and is not currency for purposes of the provisions of the Code relating to foreign currency gain and loss.

Although the Trust generally does not intend to sell bitcoin,

it may use bitcoin to pay certain expenses of the Trust, which under current IRS guidance will be treated as a sale of such bitcoin,

and/or it may

periodically sell bitcoin in an amount sufficient to pay those expenses

using fiat currency.

If the Trust sells bitcoin (for example to generate cash to pay fees or expenses) or is treated as selling

bitcoin (for example by using bitcoin to pay fees or expenses), a Shareholder will recognize gain or loss in an amount equal to

the difference between (a) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale and (b) the

Shareholder’s tax basis for its pro rata share of the bitcoin that was sold.

A Shareholder’s tax basis for its share

of any bitcoin sold by the Trust should generally be determined by multiplying the Shareholder’s total basis for its share

of all of the bitcoin held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of bitcoin

sold, and the denominator of which is the total amount of the bitcoin held in the Trust immediately prior to the sale.

such sale, a Shareholder’s tax basis for its pro rata share of the bitcoin remaining in the Trust should be equal to its

tax basis for its share of the total amount of the bitcoin held in the Trust immediately prior to the sale, less the portion of

such basis allocable to its share of the bitcoin that was sold.

Upon a Shareholder’s sale of some or all of its Shares (other

than a redemption), the Shareholder will be treated as having sold the portion or all, respectively, of its pro rata share of the

bitcoin held in the Trust at the time of the sale that is attributable to the Shares sold.

Accordingly, the Shareholder generally

will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale

of the Shares, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the bitcoin held in the Trust

at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph.

Based on current IRS guidance, such gain or loss (as well as any gain or loss realized by a Shareholder on account of the Trust

selling bitcoin) will generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder has a holding

period of greater than one year in its pro rata share of the bitcoin that was sold.

The Trust plans to treat a redemption of a

some or all of a Shareholder’s Shares, in exchange for cash, in the same manner as a sale of some or all of a Shareholder’s

periodically sell bitcoin in an amount sufficient to pay those

expenses using fiat currency.

If the Trust sells bitcoin (for example to generate cash to pay fees or expenses) or is treated as

selling bitcoin (for example by using bitcoin to pay fees or expenses), a Shareholder will recognize gain or loss in an amount

equal to the difference between (a) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale and

(b) the Shareholder’s tax basis for its pro rata share of the bitcoin that was sold.

A Shareholder’s tax basis for

its share of any bitcoin sold by the Trust should generally be determined by multiplying the Shareholder’s total basis for

its share of all of the bitcoin held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount

of bitcoin sold, and the denominator of which is the total amount of the bitcoin held in the Trust immediately prior to the sale.

After any such sale, a Shareholder’s tax basis for its pro rata share of the bitcoin remaining in the Trust should be equal

to its tax basis for its share of the total amount of the bitcoin held in the Trust immediately prior to the sale, less the portion

of such basis allocable to its share of the bitcoin that was sold.

Upon a Shareholder’s sale of some or all of its Shares

(other than a redemption), the Shareholder will be treated as having sold the portion or all, respectively, of its pro rata share

of the bitcoin held in the Trust at the time of the sale that is attributable to the Shares sold.

Accordingly, the Shareholder

generally will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant

to the sale of the Shares, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the bitcoin held

in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding

Based on current IRS guidance, such gain or loss (as well as any gain or loss realized by a Shareholder on account of

the Trust selling bitcoin) will generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder

has a holding period of greater than one year in its pro rata share of the bitcoin that was sold.

The Trust plans to treat a redemption

of a some or all of a Shareholder’s Shares, in exchange for cash, in the same manner as a sale of some or all of a Shareholder’s

Shares (as described above) for that amount of cash, though no assurance can be provided that the IRS will not take a different

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Shares in exchange for the cash received from such sale is not expected to be treated as a separate taxable event to the Shareholder.

An in-kind redemption of some or all of a Shareholder’s Shares

in exchange for the underlying bitcoin represented by the Shares redeemed generally will not be a taxable event to the Shareholder.

An in-kind redemption of some or all of a Shareholder’s

Shares in exchange for the underlying bitcoin represented by the Shares redeemed generally will not be a taxable event to the Shareholder.

The Shareholder’s tax basis for the bitcoin received in the in-kind redemption generally will be the same as the Shareholder’s

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received by the Shareholder in the redemption.

If a hard fork occurs in the Bitcoin Blockchain, the Trust could

hold both the original bitcoin and the alternative new asset.

The IRS has held that a hard fork resulting in the creation of new

units of cryptocurrency is a taxable event giving rise to ordinary income.

Moreover, the Trust Agreement requires that, if such

a transaction occurs, the Trust will as soon as possible, and subject to the Custody Agreement, direct the Bitcoin Custodian to

distribute the alternative new asset in-kind to the Sponsor, as

agent for the Shareholders, and the Sponsor will arrange to sell

the new alternative asset and for the proceeds to be distributed to the Shareholders.

The receipt, distribution and/or sale of

the new alternative asset may cause Shareholders to incur a U.S.

If a hard fork occurs in the Bitcoin Blockchain, the Trust

could hold both the original bitcoin and the alternative new asset.

The IRS has held that a hard fork resulting in the creation

of new units of cryptocurrency is a taxable event giving rise to ordinary income.

Moreover, the Trust Agreement requires that,

if such a transaction occurs, the Trust will as soon as possible, and subject to the Custody Agreement, direct the Bitcoin Custodian

to distribute the alternative new asset in-kind to the Sponsor, as

agent for the Shareholders, and the Sponsor will arrange to

sell the new alternative asset and for the proceeds to be distributed to the Shareholders.

The receipt, distribution and/or sale

of the new alternative asset may cause Shareholders to incur a U.S.

federal income tax liability.

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the Trust (“Incidental Rights”) and any such virtual currency acquired through an Incidental Right as “IR Virtual

Currency” to which the Trust may become entitled in the future.There can be no assurance that these abandonments would be

Currency” to which the Trust may become entitled in the future.

There can be no assurance that these abandonments would be

treated as effective for U.S.

3 unchanged sentences

3.8% Tax on Net Investment Income

Shareholders who are individuals are required to pay

a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married persons

filing jointly and $200,000 for single taxpayers) or their “net investment income,” which generally includes capital

gains from the disposition of property.

Shareholders who are individuals are required

to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married

persons filing jointly and $200,000 for single taxpayers) or their “net investment income,” which generally includes

capital gains from the disposition of property.

This tax is in addition to any capital gains taxes due on such investment income.

tax applies to estates and trusts.

Shareholders should consult their own tax advisers regarding the effect, if any, this tax

may have on their investment in the Shares.

A similar tax applies to estates and trusts.

Shareholders should consult their own tax advisers regarding the effect, if any,

this tax may have on their investment in the Shares.

Brokerage Fees and Trust Expenses

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any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to

Shareholders will be required to recognize the full amount of gain

or loss upon a sale or deemed sale of bitcoin by the Trust (as discussed above), even though some or all of the proceeds of such

sale are used by the Trustee to pay Trust expenses.

Shareholders may deduct their respective pro rata shares of each expense incurred

by the Trust to the same extent as if they directly incurred the expense.

Shareholders who are individuals, estates or trusts,

however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions.

An individual

may not deduct miscellaneous itemized deductions for tax years beginning after December 31, 2017 and before January 1, 2026.

tax years beginning after December 31, 2025, individuals may deduct certain miscellaneous itemized deductions only to the extent

they exceed in the aggregate 2% of the individual’s adjusted gross income.

Shareholders will be required to recognize the full amount

of gain or loss upon a sale or deemed sale of bitcoin by the Trust (as discussed above), even though some or all of the proceeds

of such sale are used by the Trustee to pay Trust expenses.

Shareholders may deduct their respective pro rata shares of each expense

incurred by the Trust to the same extent as if they directly incurred the expense.

Shareholders who are individuals, estates or

trusts, however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions, which

are nondeductible.

Similar rules apply to certain miscellaneous itemized deductions

of estates and trusts.

In addition, such deductions may be subject to phase outs and other limitations under applicable provisions

In addition, deductions may be subject to phase outs and other limitations under applicable provisions of

Investment by Certain Retirement Plans

5 unchanged sentences

United States Information Reporting and Backup Withholding

The Trustee will file certain information returns with the IRS, and

provide certain tax-related information to Shareholders, in connection with the Trust.

To the extent required by applicable regulations,

each Shareholder will be provided with information regarding its allocable portion of the Trust’s annual income,

The Trustee will file certain information returns with the

IRS, and provide certain tax-related information to Shareholders, in connection with the Trust.

To the extent required by applicable

regulations, each Shareholder will be provided with information regarding its allocable portion of the Trust’s annual income,

expenses, gains and losses (if any).

Shareholder may be subject

to United States backup withholding tax in certain circumstances unless it provides its taxpayer identification number and complies

with certain certification procedures.

Shareholders may be required to meet certain information reporting or certification requirements

imposed by the Foreign Account Tax Compliance Act, in order to avoid certain information reporting and withholding tax requirements.

The amount of any backup withholding will be allowed as a credit

against a Shareholder’s U.S.

federal income tax liability and may entitle the Shareholder to a refund, provided that the

required information is furnished to the IRS in a timely manner.

Shareholder may

be subject to United States backup withholding tax in certain circumstances unless it provides its taxpayer identification number

and complies with certain certification procedures.

Shareholders may be required to meet certain information reporting or certification

requirements imposed by the Foreign Account Tax Compliance Act, in order to avoid certain information reporting and withholding

tax requirements.

The amount of any backup withholding will be allowed as a

credit against a Shareholder’s U.S.

federal income tax liability and may entitle the Shareholder to a refund, provided that

the required information is furnished to the IRS in a timely manner.

Individual U.S.

Shareholders will generally be required to report

on their federal income tax return the receipt, acquisition, sale, or exchange of any financial interest in virtual currency, which

includes a Shareholder’s interest in bitcoin held by the Trust.

Shareholders will generally be required to

report on their federal income tax return the receipt, acquisition, sale, or exchange of any financial interest in virtual currency,

which includes a Shareholder’s interest in bitcoin held by the Trust.

Taxation in Jurisdictions Other Than the United States

Purchasers of Shares that are based in or acting out of a jurisdiction

other than the United States are advised to consult their own tax advisers as to the tax consequences under the laws of such jurisdiction

(or any other jurisdiction other than the United States to which they are subject) of their purchase, holding, sale and redemption

of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption tax or transfer tax

is payable in relation to such purchase, holding, sale, redemption or other dealing.

SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS BEFORE DECIDING

WHETHER TO INVEST IN THE SHARES OF THE TRUST.

Purchasers of Shares that are based in or acting out of a

jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences under the laws

of such jurisdiction (or any other jurisdiction other than the United States to which they are subject) of their purchase, holding,

sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption

tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing.

SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS BEFORE

DECIDING WHETHER TO INVEST IN THE SHARES OF THE TRUST.

ERISA and Related Considerations

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3(32) of ERISA, certain “church plans” within the meaning of Section 3(33) of ERISA and “non-U.S.

plans” described

in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions of Title I

of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, non-U.S.

or other law or regulation that is

substantially similar to the foregoing provisions of ERISA and the Code.

Fiduciaries of any such plans are advised to consult with

their counsel prior to an investment in the Shares.

In contemplating an investment of a portion of Plan assets in the

Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and

circumstances of the Plan, the “Risk Factors” discussed above and whether such investment is consistent with its fiduciary

responsibilities.

described in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions

of Title I of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, non-U.S.

or other law or regulation

that is substantially similar to the foregoing provisions of ERISA and the Code.

Fiduciaries of any such plans are advised to consult

with their counsel prior to an investment in the Shares.

In contemplating an investment of a portion of Plan assets

in the Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts

and circumstances of the Plan, the “Risk Factors” discussed above and whether such investment is consistent with its

fiduciary responsibilities.

The Plan fiduciary should consider, among other issues, whether:

(1) the fiduciary has the authority to make

the investment under the appropriate governing plan instrument;

(2) the investment would constitute a direct or indirect non-exempt

prohibited transaction with a “party in interest” or “disqualified person” within the meaning of ERISA

and Section 4975 of the Code respectively;

(1) the fiduciary has the authority

to make the investment under the appropriate governing plan instrument;

(2) the investment would constitute a direct or indirect

non-exempt prohibited transaction with a “party in interest” or “disqualified person” within the meaning

of ERISA and Section 4975 of the Code respectively;

(3) the investment is in accordance with the Plan’s funding objectives;

such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification, taking

into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s

need for sufficient liquidity to pay benefits when due.

When evaluating the prudence of an investment in the Shares, the Plan fiduciary

should consider the DOL’s regulation on investment duties, which can be found at 29 C.F.R.

and (4) such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification,

taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the

Plan’s need for sufficient liquidity to pay benefits when due.

When evaluating the prudence of an investment in the Shares,

the Plan fiduciary should consider the DOL’s regulation on investment duties, which can be found at 29 C.F.R.

§ 2550.404a-1.

It is intended that:

(a) none of the Sponsor, the Trustee, the Bitcoin

Custodian, the Cash Custodian or any of their respective affiliates (the “Transaction Parties”) has through this Report

and related materials provided any investment advice within the meaning of Section 3(21) of ERISA to the Plan in connection with

the decision to purchase or acquire such Shares;

and (b) the information provided in this Report and related materials will not

make a Transaction Party a fiduciary to the Plan.

(a) none of the Sponsor, the Trustee,

the Bitcoin Custodian, the Cash Custodian or any of their respective affiliates (the “Transaction Parties”) has through

this Report and related materials provided any investment advice within the meaning of Section 3(21) of ERISA to the Plan in connection

with the decision to purchase or acquire such Shares;

and (b) the information provided in this Report and related materials will

not make a Transaction Party a fiduciary to the Plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business